The end is near for BlackBerry, which has filed a "letter of intent" to sell itself to Fairfax Financial and go private, according to a company announcement on Monday afternoon. If the deal goes through, BlackBerry would be purchased for just $9 per share, which is incredibly low. That's below where the stock sat on Friday just before announcing layoffs to 40 percent of the company. Or, to put it in perspective with another, more successful phone-maker, the $4.7 billion buyout is less than Apple's revenue from its weekend sales blowout, as analyst Benedict Evans points out on Twitter.
BlackBerry officially put itself up for sale about a month ago, with little success. Not too many tech and investment companies want to pay — even dirt cheap — for the struggling Canadian smartphone maker. But buyers' interest had piqued this weekend, reported The Telegraph, after BlackBerry reported huge lay-offs and a big billion dollar loss. Despite losing money, the company's patents and software have some value, which the corporation itself has never been more vulnerable.
Fairfax Financial, one of the potential buyers cited, is currently BlackBerry's biggest shareholder. "We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world," Prem Watsa, CEO of Fairfax assured.
The deal expected to be finalized by November 4, 2013, up until which BlackBerry can court other offers. Though, at this point, a better deal seems unlikely. And, unfortunately, even for the low price a buyout is the best option for BlackBerry. Before today news, BlackBerry had said it would focus on enterprise services. "The plan appears to be to position the company as the go-to provider of systems to manage smartphone use for employers like the government and banks, where the need to ensure security is at a premium," report The Wall Street Journal's Ryan Knutson, Clint Boulton, and Will Connors. In other words, instead of focusing on phones, or an operating system, BlackBerry will sell its coveted security services to other businesses.
As an alternative, however, it's not that great. Security services is the one area BlackBerry isn't totally struggling. Now that BlackBerry's software can run on Android and iOS devices, more than 25,000 commercial and test servers run BlackBerry Enterprise Service, up from 19,000 in July. But, in the context of its overall dominance, those figures don't look that great. BlackBerry has lost a lot of its clout as the secure smartphone. Three years ago, BlackBerry had 70 percent of the business market in the U.S.; now it has arounds 5 percent, according to research firm IDC.
Now, more than three years later, BlackBerry would enter a crowded a crowded marketplace. First of all, Android and iPhone operating systems have proven secure enough for many companies, including parts of the U.S. government, to allow their employees to use them for business. BlackBerry's latest effort would give those devices even more security, offering its services on those phones. But, other start-ups already do that, as The Wall Street Journal reported back in May. One such company, MobileIron now has more than 2,200 customers, up from 200 two years ago, including Daimler, Barclays, and Wyndham Worldwide Corp.
So, given the alternative, it's no surprise that since trading of BlackBerry's shares were briefly halted, they have jumped back up after trading down five percent earlier in the day.