Canada’s smartphone industry pioneer BlackBerry is giving a lot more thought to taking the company private, according to a new report from Reuters. The strategy has been tabled before, but CEO Thorsten Heins and the BlackBerry Board of Directors are increasingly mulling the possibility of paying off shareholders and structuring a private equity deal to give them a chance to avoid continued public scrutiny.
The message from BlackBerry’s communications department has been pretty consistent regarding its recent quarterly performance, as well as issues like layoffs and executive departures – the company is still in turnaround mode, and needs to make more changes to get the organization ship-shape before it can return to growth. But that’s not a refrain that investors enjoy hearing – especially not when the track’s on repeat.
Going private would dramatically narrow the field of those the company has to be accountable to, and give it a chance to do some of the hard work it needs to do behind closed doors, without so many cooks in the kitchen. It’s a similar strategy to what Dell is currently attempting to do, with Michael Dell and private equity firm Silver Lake Partners slugging it out with public stockholders to take the PC company private.
Michael Dell says he wants to make his company “more founder led than it was in its first few decades,” arguing that this will benefit customers as it transfers risks to he and Silver Lake, while pursuing a more aggressive restructuring strategy designed to put Dell in a position to profit from a changing PC market.
BlackBerry’s Heins hasn’t expressed any similar desires so far, and in fact seemed reluctant to consider the option, preferring instead to make a big bet on BlackBerry 10 and its attendant BB10-powered handsets. So far, that hasn’t prompted quite the resurgence in consumer interest. That could have helped the company warm to the idea of a private equity deal, but also may have made it less likely that BlackBerry can find an interested partner.
The news of late has not be great for BlackBerry, with executive departures and budget cuts leading to layoffs in key areas. Yesterday, it did secure approval from the U.S. Department of Defense to supply that agency with BlackBerry 10 devices, but that’s not a huge win: it will result in 30,000 devices being used by the DOD by the end of the year, but really it would’ve been more surprising if BlackBerry’s latest was rejected for use. In other words, all options are probably on the table, given the state of affairs, and going private might be among the most palatable of those.
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