BlackBerry Rejects Fairfax $4.5 Billion Deal: Going It Alone, Yet Again
In the latest installment of BlackBerry's fall from grace, the flailing company declared Monday that it had backed out of a $4.5 billion buyout deal with Fairfax Financial Holdings; fired BlackBerry's CEO, Thorsten Heins; and intends to strike out on its own, with the support of investors. BlackBerry has seen a mind-blowing plunge into obscurity since the original iPhone batted it out of the way in the smartphone arena: originally known as Research In Motion, Blackberry once dominated nearly half of the smartphone market, and currently controls only one percent. In late September, after reporting a record quarterly loss of a billion dollars — that's three times what analysts were predicting — BlackBerry laid off 4,500 employees, threw their hands in the air, and agreed to sell themselves to Toronto-based financial holding company Fairfax.
But now, somebody's had a change of heart — and it's probably part BlackBerry, part Fairfax. Reuters reported that Fairfax has been struggling to finance the $4.5 billion deal to take BlackBerry private, and with profits continuing to fall for the struggling company, BlackBerry probably looked like an increasingly bad bet.
Meanwhile, BlackBerry has probably been having second thoughts, too: as Canadian newspaper the Globe And Mail reported in their feature on the company, there have long been power struggles between chief executives. Apparently, BlackBerry decided that without CEO Heins, they stood a chance of making a comeback — and so fired him Monday, and announced that they'd be raising investor dolla to start over, remain public, and hopefully not be the butt of any more jokes. Fairfax has agreed to the deal, and will even be investing $1 billion in New And Improved Blackberry, Inc. (NB: not official title.)
In spite of BlackBerry's very public struggles — one employee noted: “It’s not low morale. It’s no morale. It’s like working at a hospice center" — other industry giants have attempted to buy out the company, too, according to Reuters. Google, Intel, Samsung, and Cisco each considered a buyout of BlackBerry, apparently, but it's unclear whether or not they made offers — and no-one's sure if BlackBerry rejected them all to go it alone, or was simply left with no other option. An independent review committee spent this summer evaluating BlackBerry, and advising executives on what their next move should be: Monday's announcement seems to be the conclusion of the review, according to the official press release: "Today’s announcement marks the conclusion of the review of strategic alternatives previously announced on August 12, 2013," it reads.
BBM will likely play a big part in these "strategic alternatives." The company's instant-messaging service BlackBerry Messenger, which launched it to fame and its "CrackBerry" title, just made its way to the Apple and Android stores — and has been wildly popular, clocking in as the second most-downloaded app on the Apple Store at one point. It's no secret that BlackBerry has considered abandoning hardware entirely and focusing on software like BBM — and, with this new change in direction, it might be that the company has decided to do just that.
Make no mistake, however: a change in direction is very necessary. From the New York Times' feature, "Quick! Hide The BlackBerry:"
Rachel Crosby speaks about her BlackBerry phone the way someone might speak of an embarrassing relative. “I’m ashamed of it,” said Ms. Crosby, a Los Angeles sales representative who said she had stopped pulling out her BlackBerry at cocktail parties and conferences. In meetings, she says she hides her BlackBerry beneath her iPad for fear clients will see it and judge her.