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According to sources at Bloomberg, Microsoft still eyeing potential BlackBerry purchase

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Down but not out as BlackBerry looks to go private in Fairfax deal

Along with the other big news from Microsoft today, troubled smartphone company BlackBerry was snapped up by Fairfax Financial—or at least they have signed a letter of intent to do so. That means any dreams (or nightmare) of a Microsoft acquisition can be put to rest.

We won’t go too deep into the news, as we have a sister site called CrackBerry for that, but for now we’ll just summarize what it all means.

  • BlackBerry will be going private, much like Dell did recently
  • Immediate plans do not seem to affect the BlackBerry lineup, including the release of the Z30
  • Other companies could still make offers to purchase BlackBerry, including Microsoft, though it seems very unlikely
  • The deal is good in the sense that BlackBerry won’t be sold for parts, at least not immediately. Also the pressure from the stock market and analysts will be alleviated
  • The deal is bad because there is no immediate cash infusion or synergy coming from a merger with another tech company; stockholders are also getting a bad deal due to the low purchase price

Basically, if this agreement goes through, BlackBerry will go behind the curtain. Financial numbers and quarterly results will be a thing of the past and the company can focus on staging a comeback (however unlikely that may be).

It’s still not clear what Fairfax’s long term intent and goals are for the company, but previous acquisitions by them usually result in a “business as usual” environment, save for some restructuring (including perhaps more layoffs).

Speaking of layoffs, last Friday BlackBerry announced a nearly $1 billion loss and the cutting of 4,500 jobs (or about 40% of their work force)—so things were very dire for them.

For Microsoft, not much has changed. For all intents and purposes, BlackBerry was defanged months ago and clearly the momentum is with Windows Phone these days. While BlackBerry could be a niche player in the enterprise market, they have a lot of work left ahead of them.

Mobile Nations financial analyst Chris Umiastowski has written an excellent post at CrackBerry on what it all means. His conclusion:

“I didn’t think a go-private transaction would happen. I felt (and still feel) that going private won’t help this company execute on its strategy any better than being public would. It’s not like they’re getting a big injection of cash, and if they want to do this they should have done it 2 or 3 years ago.

That said, I recognize that going private doesn’t hurt. It doesn’t make things worse at all.”

In other words, for BlackBerry everything has changed and nothing has changed. 

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Reader comments

Down but not out as BlackBerry looks to go private in Fairfax deal

103 Comments

The US is market is proving to be a tough nut to crack. MS needs to execute its strategy flawlessly. Our 3 or 4% to Apple's 12% is not insurmountable. Unify desktop, tablet, phone and Xbox so that it just makes sense. Bring basic functionality back and simplify the experience.
The Surface announcements today showed that they are listening to customer feedback and showing some innovation. Now if more mainstream developers get on board this could really take off.

Thank you. In the long race for mobile dominance, these companies removed basic functions. Bb always had that great functionality and that's what I respected the most but they had to trade the toll that worked the best for one that simply looked good. I hope MS stays strong with Nokia now more than ever. Hope. Nokia!!!!!

I think it partly depends on how the iPhone 5S and 5C perform not just in the U.S., where it's expected to perfom well, but also across the globe. If those two phones don't perform well across the globe, WP might just find itself in the no. 2 spot by default.

Indeed I can see it happen worldwide due to the momentum Nokia has created. Certain so called tech sites only recognize the WP market share in the US. Rarely do I see worldwide statistics outside of WPCentral or other enthusiast sites. The 520/521 has really stirred things up.

You do realize that 9 million iphones in 3 days will generate more cash than Nokia sells 520s or all lumias all year? 
IMO, MS needs something game changer or at-least something that creates excitement. Not just on hardware, but also software. For which they need to first catch-up and surpass iOS and Android in terms of software and hardware features. Then only they have a better chance. 
This applies to WP and Windows RT both.

Some of those 9 million are captive users or so. People who has invested hundreds in Apple Store. This is about keeping the users you got and catch the new ones entering the smartphone market; Microsoft should keep this in mind at the moment of creating and executing the strategy.
I have one friend that is with Apple and won't change to Windows Phone becuase he has spent like 700 dollars in Apple Store... so he would like to switch but won't do.

Sure. But that is not the only reason for iphone sales. It's also due to brand strength, perception, mind-share, ease of use, people don't want to learn new things, don't want to lose google services. 
Btw, your friend must be very rich. $700 in Apple Store. What does the hell does he buy? 

I do not know the ratios but some of that is Music and other part are games and some apps. Also he has been Apple fan boy since the first iphone, the weird thing is that he is current on big WP news.
Also, no jail breaking. He is weird.

Good luck BB, but this changes nothing but allows the current owner to jump off of a sinking ship. Keyboards and BES Servers are dead!

Nokia should make one phone with a keyboard just to help people that can't do with out & that's a lot. Just tell they get used to WP

Should of been clearer In he's statment and calling me stupid in response hence he's brain cells comment was not very peacy tbh.

Talking about WP OS. Man is the heat killing brain cells today. Tell they get to know WP would make sense that I'm talking about WP.

Sorry mate, but both 'til' and 'till' are fine in this context. Just don't put your money in a til, okay? :-) 

then why dont put "until".... its not like 2 letters will consume his life... short for a 5 letter word? lol please... stupid lazy people. and i saw "till" not "til" before... so if a person is stupid and lazy, they deserve to be corrected!

Personally, as much as I realize that this could help Microsoft, at the same time I don't think we should dance on their graves. First, competition is losing an innovator. Yeah, they've been slow, but who's to say they wouldn't come up with something great later on? We do want competition because competition breeds innovation. And there's also the matter of 4,500 people, at least, who are going to be in the unemployment line.

No, Blackberry dying isn't a good thing. Fourth place, sure, but dead, no.

Totally agree, Blackberry may be competitors for the enterprise market, but they're not the enemy. We need less Android in the world so users can keep their info and cash safe.

This reminds me of a humorous saying in Arkansas, "Thank God for Mississippi." It means that at least there is one state with an economy worse than theirs or theirs would be the worst. I don't know what they say in Mississippi though. So WP's motto should be, "Thank God for Blackberry."

I personally think MSFT should have acquired Blackberry to strengthen their armament in the fight for market share against iPhone and Android ... Just my opinion !!!!

It sounds good on paper, but when you factor in the cost of buying BB, the cost of integration, the cost of shedding unnecessary parts and what it would actually take to merge BB services into Microsoft's, it may not be worth it. In fact, it seems clear that is exactly what Microsoft (and other companies) thought.

After considering your point, you are probably right. But also consider what if MSFT did merge said services, what a formidable force Wp would be in the battle for supremacy, especially in enterprise.

I agree and I still think MSFT should make a play for it. Why not add another billion to the purchase price. Share holders will vote almost immediately for it.

No, they can pickup the pieces after the new owners try to make a go at it.  Lost their shirts.  Then MS comes in and buys it for pennies on the dollar.  OK, that won't happen but it would a smarter thing to wait for then to buy something that is dying in the enterprise.

What do you think they would be getting for the 5 billion plus? There isn't anyhting Blackberry has that is useful except for some value in their patents. But their patents are not  that relevant for modern smartphones sp there is not much value there. There isn't any value in the subscriber base because they are losing a lot of money on them and the current base will move on to WP, iOS and Android regardless of who or who doesn't own the burning Blackberry name.

I agree with that and also would like to point out what the market reaction to MS buying BB would be.  People who own BB devices would expect them to continue supporting them as they do with MS native hardware and software like windows which I think is normally a 10 year support window, or at least WP level support, and that would be a bad place for MS to put itself since all the BB people would be very vocal the moment they ended support for the product.  Its even moreso because they've just released a few low volume devices which would really upset those people.  If you don't believe that anyone would do that, look at how upset and vocal the Lumia 900 users have been on this very board and that's just because MS isn't forcing developers to create versions for the older OS (okay that was an over-simplification). 
At any rate, it would be smarter for MS to allow someone else to break it into parts that don't have the BB name attached to it and burst everyone's bubble, then perhaps buy the manufacturing to augment what they got from Nokia should they identify that need and perhaps any useful patents.

More or less I don't see BB having anything more to offer. Enterprise wise, Nokia and MS are both moving up the ladder, unless they're already there.

Part of what makes BB unattractive these days is that each device costs a company more $ to support. A company already running exchange will have to pay for a BB server/hosted account for every BB their Staff is willing to tote around. Not the case for the competition. Why pay more to support a niche device?
The writing is on the wall I fear.

In a dream world, blackberry would just drop out, merge with Microsoft and attack the enterprise market from there. No need to keep struggling along when you can just focus on the enterprise market and be dominant. Most people are quite content with the Big 3 of Apple, Android and Windows just like most are content with the Big 4 of AT&T, T-Mobile, Verizon & Sprint. Just pick the lesser of the evils.

I Don't see the need to merge at all.. or even have a buy out.. why can't they just sell some phones with the win o/s?

Because I don't see them as successful. If HTC & Samsung are struggling against the likes of Nokia in Windows marketshare, how would they fare being that Blackberry is considered lower than both of them.

That's exactly how Windows Mobile went from #1 to insignificant. They focused exclusively on the enterprise, and were smashed by Apple when they targeted the consumer market. The enterprise market was undermined when all the CEO's had iPhones and turned their backs on Windows Mobile devices. MS have paid dearly for that, and it's actually Ballmer's biggest regret.
Windows Phone is a turning point as it targets both consumer and enterprise. I agree that they need to provide more incentives for the enterprise, but disagree that it should be their primary focus.

For MS, this might just be the best thing. Could the new owner start selling off intellectual properties and copyrights to the highest bidder? I see vultures circling up above, BB, and they're getting hungry...

They will have an extremely difficult time getting new enterprise customers. Existing ones might stick around in order to realize their ROI, but nobody else would jump on this sinking ship until it stops sinking.

Since BlackBerry is no longer in the consumer market maybe they will now consider releasing BBM for Windows Phone?

Android is a hydra that will keep sprouting new heads if others get chopped off i.e. if one OEM falls, there are always more waiting to take its place. Apple only has 1 head to lose...

Come on Micheal, you know rim is dying, they cant come back from this, the competition is way too much for them to handle. Msft/WINDOWSPHONE is clearly the #3 spot

There is no need for MS to buy BB after snapping up Nokia Devices and Services Division. For one thing, it would have created integration nightmare and identity crisis for MS, with MS, Nokia and BB under the same unbrella. Right now, MS has yet to integrate the Nokia brand into its folds and to throw in BB into the mix would have spelled death knell for MS. Besides, BB has a loser image right now in the market place and who wants to be associated with a loser? That's why it went cheap. MS third position in the mobile world is now cemented and I can see it becoming number one in the enterprise market ahead of Apple and Google. The reason for this is not just security which is important but easy integration with existing technology infrastructure especially in the software department, plus ease of transition and learning by employees who are already familiar with MS ecosystem in enterprise world. No question. This is the reason why enterprises are switching to Wondow mobile devices. In fact, I think MS will displace one of the two frontrunners in a few years from now. Just don't know which, but it will happen with the resources at its disposal and the aggressive moves of MS in playing catchup.

IMO the 2 big things that BB should do is 1. focus on enterprise by leveraging there assets and tools to say that we offer a unique and desirable business ecosystem then build on that. 2. Sign a cross services deal with MS so that they can access and utilize MS tools while MS can use BB tools and what not.

Sad to see, since BB is a Canadian company. However, they've had a string of mediocre and underwhelming releases spanning at least two years now. The PlayBook was a disaster, and the Z10 was too little, too late.

This company will be stripped of all meaningful assets, a ton of employees laid off, and remaining valuable assets sold to the best suited.

Damn... I am not enjoying this at all.

I started off at Crackberry as my first ever tech blog site to consistently read :/ sad news for me.

I couldn't keep waiting with my Bold 9630. Then Sprint released that awesome 2nd gen Evo LTE and android finally had all the apps I needed.

Of course I have always been reading all 4 sister sites since 11' I couldn't deal with Sprints coverage anymore and TMobile had those awesome new deals... then I kept visiting here and a month after release picked up the 925 :) WP finally had all the apps I needed as well.

ANYWHO lmao, sad day man :( wonder what Blaze and Adam are gonna do now..

I left Nokia for one phone (dare i admit it) it was the blackberry, it was also my first "smartphone" it took 20 mins to fully charge and i was good for 2 days rivaling only my previous favourite, the keyboard was good and the integrated Facebook and BBM was unbelievably useful also the weird little sensor mouse thingy was fun to use, but alas i needed a touchscreen and had thought about rejoining Nokia, i tested the water with a 6600 slide before purchasing my first touchscreen and first contract phone: the Lumia 800 and wow.......less than a contract later i have bought a 520 (for bro) a 720 (for wp8) and have an appointment to collect a 1020 on wed, anyway..........i have a small amount of love saved for my memories with my blackberry *sniff*

Fairfax is the largest BB shareholder. This deal props up the value of their holdings by putting a floor on BB's valuation and relieving downward pressure on its share price. At the same time, by allowing bids from other parties, they are preserving the possibility of an improved bid from MS or one of the Chinese companies. If that doesn't materialize, then expect BB to be sold off in parts.

I think this is still an opportunity Microsoft. Right now Blackberry only has Corp. business customers left. Microsoft just got certified as the most secure  wireless system. This is what Corp. businesses needs and want. 
In the long run it will be just like Xbox. They where only 1% of the game market the first year they started. Now they are over 40%! The same thing will happen with the phone! 
You can not say the compatition was weaker in the game market! Blackberry will get swallowed up b someone and whoever does that will have the business market in the long run!

I don't think that blackberry will still in the 3rd place, hope they are all doing fine, but for the truth I myself don't like their OS no offense just my opinion.