BlackBerry Finds Buyer of Its 'Prosumer' Strategy at $4.7 Billion
NEW YORK ( TheStreet) -- Just one trading day after BlackBerry
Put differently, in the eyes of shareholders, BlackBerry may last less than one trading day as an enterprise-focused company.
For investors who have long argued the BlackBerry's stable of assets such as its mobile device management business and its BBM messaging system are worth in excess of the company's total market value, Fairfax's letter of intent on a $9 a share takeout may be a disappointment. Monday's proposed deal, however many strings are attached, may also prove to be a relief to investors who worried BlackBerry was on a path to extinction after it spent years on a money losing effort to compete against Apple
Either way, BlackBerry's Monday disclosure of its letter of intent with Fairfax marks a whirlwind few days. Last week, BlackBerry announced a major restructuring that will cut the company's workforce by 40% . It also pre-announced its second quarter earnings , which was taken by some analysts to be the biggest-ever miss in the tech sector.
BlackBerry said its second-quarter revenue would come in at $1.6 billion, or about half of consensus Wall Street estimates. Of that revenue, 50% is expected to come from BlackBerry's various IT and security services. Meanwhile, the company forecast an impairment of as much as $960 million as a result of a glut of unsold BlackBerry Z10 handsets.
CEO Thorsten Heins said on Friday that BlackBerry will trim its smartphone portfolio to four so-called "prosumer-centric" devices. "Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user," Heins said in a statement.
It is hard to isolate BlackBerry's letter of intent agreement with Fairfax as independent from the company's restructuring announced at the end of trading on Friday.
Shares in BlackBerry fell nearly 20% late on Friday when the company pre-announced its weak earnings. Now, on the heels a $9 a share letter of intent, Prem Watsa, Chairman and CEO of Fairfax, said in a statement the investment firm is delivering "value to shareholders."
Value, in this instance, appears to presume investors either had forgotten about Friday's tumultuous trading or that they thought BlackBerry was realistically worth far less than $9 a share.
All told, the timing of BlackBerry's Friday pre-announcement and its Monday commitment is extremely curious. If Dell's