updated 05:05 pm EDT, Wed October 2, 2013
Company may be selling off real estate prior to ownership transfer
BlackBerry has had a mixed day of news -- the same day it announced that it has to take a larger-than-expected $400 million write-down for its 4,500 layoffs (which was expected to only cost $100 million), reports have surfaced that there are additional suitors for the company. Private equity firm Cerberus, specializing in beleaguered company acquisitions, is reportedly looking at bidding for the company -- complicating the bid by Fairfax Financial. Should the bid collapse, Fairfax would be owed over $100 million by BlackBerry.
The $400 million write-down was noted in a regulatory filing, with the company saying that "the smartphone market is maturing, resulting in lower growth rates, particularly in the high-end segment of the market. The company has experienced a decline in demand for its products and in its overall market share."
Admitting that there is a problem with the number of applications available for the new phones from the Canadian manufacturer, the filing states that the company's decline "can also be attributed to consumer preferences for devices with access to the broadest number of applications, such as those available in the iOS and Android environments."
Reports that Cerberus is looking to sign a confidentiality agreement with BlackBerry that would allow unfettered access by the investment company into the cellphone manufacturer's financial information has sent BlackBerry stock up over one percent at one point, but the gains have since been lost.
An interview with Fairfax Financial CEO Prem Watsa showed that the executive has confidence in the company's chance for a meaningful recovery, but didn't expect it to return to its glory days of a decade ago. "It's a good company, it's a good product. Otherwise nothing could help it," Watsa said. "Can it compete in the consumer market with Apple and Samsung and the Android? No, we think that's very tough. But in the enterprise market they've got huge advantages."
Additionally, Canada's Globe and Mail newspaper claims that BlackBerry may have already begun selling properties that the company calls "superfluous," as well as evaluating other cash-generating activities in an effort to stop the tide of red ink. Regardless of problems, Fairfax's due diligence should be completed by the middle of November.