BlackBerry puts self up for sale in effort to survive in smartphone market

BlackBerry has put itself up for sale as part of a wider strategic review to help the ailing Canadian handset maker in its battle for survival in the fiercely competitive smartphone market.

In a sign of the failure to stem subscriber defections following the launch of its much heralded BlackBerry 10 devices, the maker of the once must-have device for the business world conceded that it needed to look at options for its future including a sale or alternatives such as joint venture.

Shares in the group, which had fallen by more than a third in the past month following a profit warning in June, gained 5 per cent to almost $11. At that share price the company is valued at about $5.3 billion, a steep drop from a market capitalisation of more than $41 billion just three years ago.

Slow to react
BlackBerry was slow to react to changes in the telecoms market, according to analysts. The first BlackBerry device was sold in 1999 and by focusing on secure email and other messaging applications quickly became a favourite with the business world.

But by the time the company’s new BlackBerry 10 handset was launched, many analysts said they lacked clear technological advantages to the myriad smartphones already on the market. Initial sales have been disappointing

"While clearly not the end of the story, BlackBerry in its current form has come to an end," said Ben Wood, analyst at CCS Insight.

"BlackBerry can't do it on its own any more. It was slow off the blocks when smartphones came out and closing the gap when Apple and Samsung have created such a formidable lead has proven impossible."

BlackBerry will set up a committee chaired by board member Timothy Dattels to look at the options, with speculation suggesting the group could consider partnerships with private equity groups or even separate its business into handset and services operations.

A take-private deal akin to that of Dell would at least allow the group the benefits of rebuilding away from the public eye, according to analysts.

Rivals such as China's Lenovo have also been linked with takeover interest in the past, although others such as Facebook, Amazon, Microsoft and Huawei have been mooted as interested parties by analysts.

However, bankers have privately warned that the value of its assets has dropped in the past year given BlackBerry’s dwindling subscriber base and uncertainty over its intellectual property, and pointed to a worrying cash burn in its accounts.

Political angle
There is also a political angle given how embedded the devices are in governments. Jefferies, the investment bank, said: "While Lenovo would likely be the most willing buyer, we think the US government would block an acquisition due to national security concerns."

– Copyright The Financial Times Limited 2013