BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) just might decide to go private, according to sources cited by Nadia Damouini, Euan Rocha and Greg Roumeliotis of Reuters. Shares of the Canadian handset maker’s stock surged in premarket trading on NASDAQ, rising as much as 7 percent after the story was released by Reuters.
BlackBerry could fix its problems in private
The smartphone maker has been struggling to make a recovery, and more and more evidence points to Windows Phone, which had been the number four operating system, beginning to supplant BlackBerry for third place in the smartphone market. Sources told Reuters that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s board of directors is beginning to change its tune. Apparently they’re starting to believe that it would be easier to right the ship if the company wasn’t under the public microscope.
Seth Klarman Tells His Investors: Central Banks Are Treating Investors Like “Foolish Children”
"Surreal doesn't even begin to describe this moment," Seth Klarman noted in his second-quarter letter to the Baupost Group investors. Commenting on the market developments over the past six months, the value investor stated that events, which would typically occur over an extended time frame, had been compressed into just a few months. He noted Read More
However, there’s no deal on the table yet, and BlackBerry has not officially listed itself for sale. Analysts have long considered what BlackBerry Ltd (NASDAQ:BBRY) would be worth if the company sold itself off piece by piece. The company’s patent portfolio is quite valuable, and its services business may interest some tech companies.
Could BlackBerry find a buyer?
Even if the company does decide to list itself for sale, it might be difficult to find a buyer or secure the funding that would be required in order to take the company private. Private-equity firms may be unlikely to step up and work with the company because of how rapidly its subscriber base and market share is falling and due to the losses it is posting each quarter.
Shares of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) have dropped more than 19 percent so far this year, and its market value has declined to $4.8 billion. In 2008, the company was worth $84 billion.
Possibilities for BlackBerry and Dell
Sources told Reuters that the Canadian company was been talking with the private-equity firm Silver Lake Partners, which is currently involved in the go-private battle for Dell Inc (NASDAQ:DELL). Dell has partnered with founder Michael Dell and is facing off with activist investor Carl Icahn, who thinks the company should remain public.
Sources said if Silver Lake does prevail in the Dell Inc (NASDAQ:DELL) fight, then it could partner with BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) in the mobile computing industry. Dell has been struggling to gain traction in the industry, so a partnership between the two companies could make sense. The sources did specifically say though that BlackBerry’s talks with Silver Lake did not include negotiations for a buyout or any other transaction.