

BlackBerry-Fairfax takeover dies; Thorsten Heins out - jmacd
http://www.theglobeandmail.com/report-on-business/blackberry-fairfax-deal-dies-thorsten-heins-out/article15240310/?click=tglobe

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sheri
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
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
> 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
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.

~~~
tokenizer
Exactly. I don't see current companies (including Samsung and Xiaomi) making
enough of an impact to dethrone Apple or Google from their places unless one
of these smaller companies can literally rival the touchscreen shift in market
disruption.

------
trevelyan
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
_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
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.

------
melling
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.

~~~
mistermann
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.

~~~
protomyth
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
How has that strategy worked out for others in the same space?

~~~
protomyth
How has switching to Android worked out for anyone but Samsung?

~~~
lambersley
Samsung makes pretty hardware, BlackBerry doesn't. I'm not sure anyone buys a
Samsung device because it's running Android OS.

~~~
pachydermic
What do you mean by that? I didn't buy a Samsung because of the hardware alone
- first I decided that I wanted an Android phone and picked the one which I
thought was the best at the time (based largely on hardware). But the OS came
first for me... so Samsung won the competition with an iPhone with the
software and other Android phones with the hardware.

Actually, I think that's how a lot of people make their decision. These people
decide what OS/ecosystem they like, then whittle down their options from
there. But a lot of people probably just walk into the store not knowing what
they really want. I'm actually not sure which kind of person is more common.

~~~
lambersley
That you're aware the forum exists tells me you're not an average user of
technology. I'd be willing to bet a month's wage that most people reading this
post decided on a device in the manner you describe. I submit we are not
average users.

When Samsung began their marketing campaign, it wasn't directed at you and I.
It had very little to do with the Operating System and more to do with cute
features the company had added. See 'bump'. The campaign was directed at
average users.

~~~
pachydermic
I was thinking more of my parents, girlfriend, and her family who have never
heard of this website and are definitely not tech savvy. I think that it's
hard to separate marketing/branding from software, though. Her family
definitely just assumes that anything not Apple is cheap, while she decided to
switch to an Android phone not too long ago - once she made that choice, she
went with the phone that looked the coolest (HTC One).

It's hard to say who's average, though. At the end of the day, I think it's
probably brand name recognition more than anything else which drives
purchasing decisions. I'd like to see what the manufacturers know...

Actually, now that I'm thinking about it what I think drove my girlfriend to
Android more than anything else is probably how poorly her macbook aged
(although with any laptop you can only expect a couple of good years, so she
might be being a bit unfair) - especially how awful iTunes is on that thing.
Just opening iTunes completely grinds that thing to a halt.

------
RockyMcNuts
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
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
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=...](https://www.google.com/finance?q=NASDAQ%3ABBRY&fstype=ii&ei=WdZ3UuDaAYy0lwOa8QE)

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.

------
drpgq
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
QNX?

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

~~~
jmacd
I think the $1bn is coming from Fairfax, but the article isn't entirely clear
on that.

~~~
stygiansonic
This PR news release is a little less opaque:
[http://www.marketwired.com/press-release/blackberry-
receives...](http://www.marketwired.com/press-release/blackberry-receives-
investment-us-1-billion-from-fairfax-financial-other-institutional-nasdaq-
bbry-1847833.htm)

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.)

