12 ms·

BlackBerry-Fairfax takeover dies; Thorsten Heins out

58 points by jmacd 13y ago

sarreph 13y ago
Good luck trying to raise "fresh financing"...
- jmacd 13y ago
  I think the $1bn is coming from Fairfax, but the article isn't entirely clear on that.
  - mitchellhislop 13y ago
    I read (I can't remember where) that Fairfax was $250 million of that $1bn new convertible debt
  - stygiansonic 13y ago
    This PR news release is a little less opaque: http://www.marketwired.com/press-release/blackberry-receives-investment-us-1-billion-from-fairfax-financial-other-institutional-nasdaq-bbry-1847833.htm http://www.marketwired.com/press-release/blackberry-receives... Summary: - $1 billion of convertible debentures, $250 million of which is provided by Fairfax. - 6% coupon rate, 7-year maturity. - Convertible to BB shares at a price of $10.00. (If all the debt was converted, it would result in 16% of all common shares outstanding, so a significant potential dilution.)
- corresation 13y ago
  If they put their patents and stake in "Rockstar" as collateral, Google would certainly offer them several billion.
drpgq 13y ago
How long until Blackberry flames out completely? I used to think that they had technology that was worth saving, but this is pretty much Nortel 2.0 now.
- randomhunt 13y ago
  QNX?
trevelyan 13y ago
The situation is worse than it looks. Unmentioned in this article is that Fairfax already owns 10% of Blackberry and is the company's largest shareholder. Canadian papers have circulated rumors the offer was intended to set a baseline price they hoped would be overbid. Which makes sense -- if Fairfax was serious about increasing its ownership it has an interest in reducing the price, or could look to purchase a controlling interest rather than the whole company.
- corresation 13y ago
  Canadian papers have circulated rumors Which papers? I've seen no such rumors. You don't flippantly make $5 billion dollar bids -- the problem Fairfax encountered was that in such a deal they need some banks to sidle up with them, and few (or no) banks wanted to. Also, Fairfax wanted to take the company private. You can't do that secretly or incrementally. It is an all-out endeavor, exactly as they attempted. I believe their bid was sincere.
  - robk 13y ago
    To be fair, you don't make a $5B bid without having the capital lined up. It felt really scummy to have them bid up like that then include those egregious breakup fees if BB found a higher bidder.
  - trevelyan 13y ago
    I think it was the Globe.
melling 13y ago
Does anyone see a scenario where Blackberry survives? Apple was once 90 days from bankruptcy. Blackberry certainly has its fans. Their keyboard phone is somewhat unique.
- antr 13y ago
  It's a tough one. I've got a feeling Blackberry is another "Kodak". File for bankruptcy protection, sell different divisions/assets to different buyers, sell off patents and wait for it to emerge from bankruptcy.
- mistermann 13y ago
  It seems to me like they should switch to Android with their own launcher and compete on hardware. The big fat margins of the past are long gone but I think there is a healthy niche here that they could sit in for quite some time.
  - admax88q 13y ago
    I hope not. BB10 is a very nice operating system. I'd hate to see it go to waste. I find it much more responsive and snappy than Android.
  - protomyth 13y ago
    Switching to Android is just a death wish. They need to control the whole stack and cannot be beholden to someone who competes with them in messaging.
    - Touche 13y ago
      How has that strategy worked out for others in the same space?
      - thrillgore 13y ago
        Pretty well for Samsung. It hasn't for HTC, LG, Motorola...
sheri 13y ago
I find it quite incredible that these days a company can go from a position of almost unassailable strength to total collapse in a few years. That too in a market that is booming rather than falling. Blackberry had over 50% market share back in the mid to late 2000's, and now is defunct. In India back in 2008 Nokia was king. Pretty much every phone was a Nokia phone, and now Nokia too is trying to claw back. Now that the smartphone market seems to have matured, do we expect to see the current market situation to remain relatively stable over the next decade or so?
- tokenizer 13y ago
  That depends on if there's any more massive paradigm shifts, and if those shifts are created by new players or not. My guess is that, due to Apple and Google's expertise in touch screen and motion capture software, you won't see any new players coming out of the woodwork with a new phone everybody wants. That said, the crowdsourcing of Firefox and Ubuntu phones could potentially disrupt things a little longer come 2014.
  - jonknee 13y ago
    > My guess is that, due to Apple and Google's expertise in touch screen and motion capture software, you won't see any new players coming out of the woodwork with a new phone everybody wants. What does that have to do with anything? Samsung is the largest smartphone maker and you didn't even mention them. Xiaomi is likely to be a huge force in the next couple years. I'm sure there will be more.
    - objclxt 13y ago
      Samsung primarily make phones which run Google software, and unless Samsung want to do an Amazon and ditch the Google Play Services infrastructure for all intents and purposes they are Google phones. Samsung sells lots of phones: how many of those phones are running Tizen (né Bada)? I think the point the OP was trying to make is that it's highly unlikely we'll see a company collapse to the extent that RIM/BlackBerry did unless there's a major paradigm shift in mobile technology. Are Xiaomi going to be driving that? I'm not sure.
RockyMcNuts 13y ago
just speculating but... - Microsoft is the natural buyer - for patents and to migrate users to Windows Phone with Blackberry Messenger and BES, don't really see anyone else who wants into this business v. Google and Apple, plus of course the enterprise users are all Exchange, rather keep in-house than cede to Apple and Google - Board decided to sell. Prem Watsa is a big investor, he put out a maybe-not-that-serious $9 per share bid as a stalking horse - Management did a road show to get a bidding war going (supposedly met with Facebook... you really think Zuck has time for this? probably just weak-ass psy ops v. Ballmer and Elop) - No bite at whatever they were asking, presumably $10+ - For his trouble Watsa picks up some cheap $10 options on ~16% of the company - According to Yahoo, they have $4.50 in cash, last price $7, enterprise value < $2b at current share price - Gotta think at that price Microsoft could buy it in a sec - Sort of sounds like Watsa saying we got plenty of cash, you gotta pay me at least $10 to go away. - Not really sure what leverage Watsa and management have if someone decides to go hostile, proxy fight , but that's unusual in tech, nobody really wants that drama
- robk 13y ago
  Seems a pretty risky bargain for Prem to put $250m at risk with their cash pile dwindling day by day and likely costs of shutting down various parts of the business. If I were a buyer I'd be just sitting and waiting for them to get more and more desperate.
  - RockyMcNuts 13y ago
    clearly, the buyer(s) is/are waiting for them to get more desperate. but Watsa gets paid before stockholders, company has $2.3b in cash per Yahoo Finance. Might have costs in laying off/shutting down, but also have assets and income streams. Not clear they are hemorrhaging cash, they lay off employees, stop investing, they stem the bleeding. Google Finance has good cash flow charts - https://www.google.com/finance?q=NASDAQ%3ABBRY&fstype=ii&ei=WdZ3UuDaAYy0lwOa8QE https://www.google.com/finance?q=NASDAQ%3ABBRY&fstype=ii&ei=... Believe it or not... not all companies need to constantly raise funds or go out of business... legacy companies have positive cash flows. Prem's momma didn't raise no fool.

58 points by jmacd 13y ago

sarreph 13y ago

Good luck trying to raise "fresh financing"...

jmacd 13y ago
I think the $1bn is coming from Fairfax, but the article isn't entirely clear on that.
- mitchellhislop 13y ago
  I read (I can't remember where) that Fairfax was $250 million of that $1bn new convertible debt
- stygiansonic 13y ago
  This PR news release is a little less opaque: http://www.marketwired.com/press-release/blackberry-receives-investment-us-1-billion-from-fairfax-financial-other-institutional-nasdaq-bbry-1847833.htm http://www.marketwired.com/press-release/blackberry-receives... Summary: - $1 billion of convertible debentures, $250 million of which is provided by Fairfax. - 6% coupon rate, 7-year maturity. - Convertible to BB shares at a price of $10.00. (If all the debt was converted, it would result in 16% of all common shares outstanding, so a significant potential dilution.)
corresation 13y ago
If they put their patents and stake in "Rockstar" as collateral, Google would certainly offer them several billion.

drpgq 13y ago

How long until Blackberry flames out completely? I used to think that they had technology that was worth saving, but this is pretty much Nortel 2.0 now.

randomhunt 13y ago
QNX?

trevelyan 13y ago

The situation is worse than it looks. Unmentioned in this article is that Fairfax already owns 10% of Blackberry and is the company's largest shareholder. Canadian papers have circulated rumors the offer was intended to set a baseline price they hoped would be overbid. Which makes sense -- if Fairfax was serious about increasing its ownership it has an interest in reducing the price, or could look to purchase a controlling interest rather than the whole company.

corresation 13y ago
Canadian papers have circulated rumors Which papers? I've seen no such rumors. You don't flippantly make $5 billion dollar bids -- the problem Fairfax encountered was that in such a deal they need some banks to sidle up with them, and few (or no) banks wanted to. Also, Fairfax wanted to take the company private. You can't do that secretly or incrementally. It is an all-out endeavor, exactly as they attempted. I believe their bid was sincere.
- robk 13y ago
  To be fair, you don't make a $5B bid without having the capital lined up. It felt really scummy to have them bid up like that then include those egregious breakup fees if BB found a higher bidder.
- trevelyan 13y ago
  I think it was the Globe.

melling 13y ago

Does anyone see a scenario where Blackberry survives? Apple was once 90 days from bankruptcy. Blackberry certainly has its fans. Their keyboard phone is somewhat unique.

antr 13y ago
It's a tough one. I've got a feeling Blackberry is another "Kodak". File for bankruptcy protection, sell different divisions/assets to different buyers, sell off patents and wait for it to emerge from bankruptcy.
mistermann 13y ago
It seems to me like they should switch to Android with their own launcher and compete on hardware. The big fat margins of the past are long gone but I think there is a healthy niche here that they could sit in for quite some time.
- admax88q 13y ago
  I hope not. BB10 is a very nice operating system. I'd hate to see it go to waste. I find it much more responsive and snappy than Android.
- protomyth 13y ago
  Switching to Android is just a death wish. They need to control the whole stack and cannot be beholden to someone who competes with them in messaging.
  - Touche 13y ago
    How has that strategy worked out for others in the same space?
    - thrillgore 13y ago
      Pretty well for Samsung. It hasn't for HTC, LG, Motorola...

sheri 13y ago

I find it quite incredible that these days a company can go from a position of almost unassailable strength to total collapse in a few years. That too in a market that is booming rather than falling. Blackberry had over 50% market share back in the mid to late 2000's, and now is defunct. In India back in 2008 Nokia was king. Pretty much every phone was a Nokia phone, and now Nokia too is trying to claw back. Now that the smartphone market seems to have matured, do we expect to see the current market situation to remain relatively stable over the next decade or so?

tokenizer 13y ago
That depends on if there's any more massive paradigm shifts, and if those shifts are created by new players or not. My guess is that, due to Apple and Google's expertise in touch screen and motion capture software, you won't see any new players coming out of the woodwork with a new phone everybody wants. That said, the crowdsourcing of Firefox and Ubuntu phones could potentially disrupt things a little longer come 2014.
- jonknee 13y ago
  > My guess is that, due to Apple and Google's expertise in touch screen and motion capture software, you won't see any new players coming out of the woodwork with a new phone everybody wants. What does that have to do with anything? Samsung is the largest smartphone maker and you didn't even mention them. Xiaomi is likely to be a huge force in the next couple years. I'm sure there will be more.
  - objclxt 13y ago
    Samsung primarily make phones which run Google software, and unless Samsung want to do an Amazon and ditch the Google Play Services infrastructure for all intents and purposes they are Google phones. Samsung sells lots of phones: how many of those phones are running Tizen (né Bada)? I think the point the OP was trying to make is that it's highly unlikely we'll see a company collapse to the extent that RIM/BlackBerry did unless there's a major paradigm shift in mobile technology. Are Xiaomi going to be driving that? I'm not sure.

RockyMcNuts 13y ago

just speculating but... - Microsoft is the natural buyer - for patents and to migrate users to Windows Phone with Blackberry Messenger and BES, don't really see anyone else who wants into this business v. Google and Apple, plus of course the enterprise users are all Exchange, rather keep in-house than cede to Apple and Google - Board decided to sell. Prem Watsa is a big investor, he put out a maybe-not-that-serious $9 per share bid as a stalking horse - Management did a road show to get a bidding war going (supposedly met with Facebook... you really think Zuck has time for this? probably just weak-ass psy ops v. Ballmer and Elop) - No bite at whatever they were asking, presumably $10+ - For his trouble Watsa picks up some cheap $10 options on ~16% of the company - According to Yahoo, they have $4.50 in cash, last price $7, enterprise value < $2b at current share price - Gotta think at that price Microsoft could buy it in a sec - Sort of sounds like Watsa saying we got plenty of cash, you gotta pay me at least $10 to go away. - Not really sure what leverage Watsa and management have if someone decides to go hostile, proxy fight , but that's unusual in tech, nobody really wants that drama

robk 13y ago
Seems a pretty risky bargain for Prem to put $250m at risk with their cash pile dwindling day by day and likely costs of shutting down various parts of the business. If I were a buyer I'd be just sitting and waiting for them to get more and more desperate.
- RockyMcNuts 13y ago
  clearly, the buyer(s) is/are waiting for them to get more desperate. but Watsa gets paid before stockholders, company has $2.3b in cash per Yahoo Finance. Might have costs in laying off/shutting down, but also have assets and income streams. Not clear they are hemorrhaging cash, they lay off employees, stop investing, they stem the bleeding. Google Finance has good cash flow charts - https://www.google.com/finance?q=NASDAQ%3ABBRY&fstype=ii&ei=WdZ3UuDaAYy0lwOa8QE https://www.google.com/finance?q=NASDAQ%3ABBRY&fstype=ii&ei=... Believe it or not... not all companies need to constantly raise funds or go out of business... legacy companies have positive cash flows. Prem's momma didn't raise no fool.