Feeds

Prem Watsa takes control of BlackBerry as tech vultures circle firm

White knight charges to the rescue, horse promptly keels over

Providing a secure and efficient Helpdesk

Analysis It could only happen at BlackBerry. A white knight rides to the company’s rescue, only for the horse to drop dead underneath him.

So much for Prem Watsa’s rescue mission. The man dubbed the “Canadian Warren Buffet” has at last gained control of the company, as “lead director”, but at what cost? Five weeks ago BlackBerry’s board agreed to be taken private by Watsa’s Fairfax, which was already BlackBerry’s largest shareholder, for [CA] $4.7bn.

Evidently Fairfax couldn’t find the backing (he most certainly could raise the debt) and the BlackBerry board didn’t receive any better offers by the deadline on Monday. Facebook, Cisco and Qualcomm have all been touted as potential partners – but Watsa was all they had.

Which means that BlackBerry remains in the coconut shy as a public company – obliged to bomb its investors with another set of quarterly earnings. Going private would have provided a safe haven from bad headlines, if nothing else, giving the board time to regroup away from the public soap opera.

The clumsy deal also means that BlackBerry is saddled with a significant new debt obligation of $1.25bn. Which, while smaller than its cash pile, carries an extremely high rate. At 6 per cent it’s as ruinous as a the PIIGS countries' long-term debt. The deal avoids a shareholder vote by a whisker – under NASDAQ rules (WSJ, registration required). And the uncertainty goes on.

On the positive side, the absentee CEO Thorsten Heins has gone. Heins had been invisible since the scale of the BB10 flop became apparent in July, and ominously, his name wasn’t on the open letter of reassurance (“You can continue to count on BlackBerry”) that ran as an advertisement in many newspapers last month.

Heins had an extremely difficult job but his costliest mistake was the delusion that the new platform BB10 could still be all things to all people. BB10 was late and wasn’t really ready at launch – but more importantly, it required hardware far beyond the price point that consumers were willing to pay. Two thirds of the global consumer market is looking for budget devices. BB10 is actually a very good specialist enterprise and professional choice (see our Z30 review to find out why), but BlackBerry needed to abandon the emerging markets before they abandoned BlackBerry – which they’ve done this year. While governments were aghast at the NSA revelations, BlackBerry continued to promote Alicia Keys' latest tour.

Heins’ replacement as caretaker CEO is John Chen, who saved Sybase and famously dodged the dot.com bubble. Officially, he’s merely an “interim” but Chen understands enterprise IT well, as well as how to survive in a market dominated by giants. This is a huge upgrade.

One of Chen’s first statements is apparently that he will “build up the company’s handset business”, according to one wire report – but we merely have Reuters’ word for that, and no direct quotes can be found to support it. Chen couldn’t really imply anything else, as anything that casts doubt about the future of BB10 hardware would kill the sales of BES10, which is BlackBerry’s steadiest long-term cash cow.

For 18 months BlackBerry hinted that it would welcome licensing partners, but none have stepped up to the plate. Ideally, BlackBerry would retain a core design and R&D team and seek a Nexus-style partner to complete the integration, and manufacture the hardware. This would free resources to specialist beef up sales and support for enterprises. BlackBerry’s own network is an enterprise cloud that’s waiting to happen – another asset that needs focus and some creative thinking, as a platform for business services. Losing those low value Mexican and Filipino BBM-ers has an upside.

Against the ongoing catastrophe of BlackBerry’s failed comeback and sales collapse this year, the success of BBM looks quite surreal. It’s topping the Google Play charts and heading for 100m users. It’s exactly what Facebook needed, and it’s hard to imagine why Zuck’s M&A team walked away. Perhaps because they felt they could snap it up for even less if they waited.

The Watsa takeover is surely a zenith for The Company Formerly Known As RIM. At last, at least, it’s got some outsider talent at the top. ®

Beginner's guide to SSL certificates

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.