BlackBerry: The perils of 'strategic alternatives' and limbo land

BlackBerry: The perils of 'strategic alternatives' and limbo land

Summary: There are a lot of perils to seeking strategic alternatives while you're trying to mount a comeback. BlackBerry will like to pretend that it's business as usual during the process, but uncertainty will persist.

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BlackBerry has a lot going for it, but it's going to be increasingly hard to keep momentum as it explores so-called "strategic alternatives" that include joint ventures, partnerships, going private and an outright sale.

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The company on Monday said that it has formed a committee to evaluate strategic moves that would accelerate BlackBerry 10. BlackBerry CEO Thorsten Heins said the company has a strong balance sheet, "compelling long-term opportunities for BlackBerry 10" and a strong customer base.

Earlier: BlackBerry's board announces it's open to selling the company | BlackBerry 'mulls going private' to fix problems amid turnaround blues

Now the press release is out of the way the real fun begins. There are a lot of perils to seeking strategic alternatives while you're trying to mount a comeback. Many companies eye strategic alternatives and like to pretend that it's business as usual during the process. The catch is that it's rarely business as usual. To wit:

  1. Customers wonder about the future. In BlackBerry's case, strategic alternatives will be in the minds of consumers. Enterprises will at least pause a bit before deploying something like BlackBerry Enterprise Server. In both cases, the buying process requires that you're betting on BlackBerry being around for a few years.
  2. Employees are uncertain. Perhaps the best move would be to go private. However, it's unclear what BlackBerry's debt structure will look like in a transaction. Employees have to go looking for other gigs if they haven't already.
  3. Competitors (and potential buyers) get to know every little detail of BlackBerry's business. There probably isn't one buyer for BlackBerry. Some companies would want BlackBerry's mobile device management and enterprise business---Samsung and Microsoft perhaps. Others would just want the intellectual property (Google, Microsoft, Apple). And a few like Lenovo may take bigger chunks of the company to make a North American play. Lenovo could have the ThinkPad and BlackBerry brands to target the enterprise. HP might be interested too.

All of those options, which will be explored as BlackBerry hits limbo land, will introduce risks to the company's future. We all know the positives and negatives for BlackBerry. On the plus side of the ledger, BlackBerry has a strong customer base, a nice mobile operating system, strength in emerging markets and an enterprise footprint. On the minus side of the ledger, BlackBerry needs to beef up its developer base, capture the imagination of consumers tethered to iOS and Android and produce a leap frog effect in technology.

Analysts said that BlackBerry would be negligent if it didn't consider a move like going private. The problem is that most privatizations of technology companies have involved software and services firms, said TD Securities Scott Penner. Penner added:

We estimate there have been 108 privatizations of technology companies in the last 10 years (deals of more than $50mm in size, in either North America or Western Europe). Deals for hardware companies such as BlackBerry have comprised only 26% of transactions. There have only been two completed deals of $2 billion or more during the last three years.

It's unclear whether finding strategic alternatives will fix BlackBerry, but there are no easy wins here. The only certainty is that the company is entering a tricky time.

Topics: BlackBerry, Mobility, Smartphones

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4 comments
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  • Blackerry Hiatus

    A Blackberry hiatus in the Fall Season, is likely to lead to a permanent cancellation - to use TV-land analogies.

    Any mild uplift in Q2 sales, will be wiped out on the run up to XMAS, and it will become a self-fulfilling prophecy. You don't haul the 'For Sale' sign up like this, as it will kill you usiness prospects - A quiet sale to Samsung, Amazon etc is in order, before there is nothing left but the patent warchest, QNX division and the BES Backend.
    neil.postlethwaite
  • BB has a great opportunity staring them in the face.

    There is a huge market for private "clouds" that DO NOT rely on putting all your data on the "mother ship" where The Patriot Act means there is no such thing as privacy. (Even Microsoft's private cloud reports to the mother ship.)

    Build a cloud app/OS that will run on a small office or home server, secure ALL communications between it and devices for communications across the internet and you have a home run. Yes, there really is a reason the vast majority of business has not jumped on the cloud bandwagon and that is the loss of privacy. Something BB has been known to do very well. They need to build on that and I'd buy it in a heartbeat.
    NoAxToGrind
  • The NSA would love it

    if BlackBerry went away.
    Buzz88
  • The perils of 'strategic alternatives' and limbo land

    I agree with this article. Nobody is going to want to buy a Z or Q10 not knowing the future of Blackberry. My personal belief is they already know who wants to line up with them. The sooner they get this done the better.

    BTW...I own a Z10 and it is a great product. However, I will not go forward with BB until I know where they are going and with who.
    BFalcon1