A Smaller BlackBerry to Emerge After the Buyout

2013 was supposed to be a turnaround year for BlackBerry Ltd (formerly Research in Motion Ltd). After a prolonged period of share losses and a stagnant product portfolio, the company released a completely re-vamped operating system and three new smartphones running on it. However, these efforts did not affect sales enough to reverse the fortunes of the company, particularly in the crucial North American market.

Volume sales of BlackBerry Smartphones in North America

Blackberry Sales
Source: Euromonitor International

The Future of BlackBerry

Despite its most recent losses owing to a write-down of nearly US$1 billion in unsold inventory, the US$9 per share price outlined in the buyout is on the low side. In an earlier piece featured on Passport, I argued that a piecemeal sale of the company would likely maximize stockholder value.  The buyer, a group of investors led by Fairfax Financial, has likely reached a similar conclusion. Under the new ownership BlackBerry Ltd hopes to become an enterprise IT-focused company providing communication and infrastructure solutions to medium and large enterprises. This means limiting its focus smartphones or winding down the business consumer side of its business entirely; the new owners will likely also look to divest other non-core assets like the automotive systems business it acquired from QNX. The future BlackBerry Ltd will be a smaller company with a narrow focus, and business units like devices and BBM will likely be either spun-off, sold, or gradually wound-down and sold for parts.