BlackBerry to explore strategic options - including a possible sale

BlackBerry has said announced that its board has formed a special committee to explore its strategic alternatives to enhance value and increase scale – including the possibility of a sale (release).

Rumours that the phone company was to go private have been circulating for month, and shares jumped last week after sources reportedly said the company was seriously considering the move.

Then this afternoon, BlackBerry halted trading and the company released its announcement.

The possibilites being explored are: joint ventures, strategic partnerships, a sale of the company, or other possible transactions.

Thorsten Heins, chief executive of BlackBerry, said:

We continue to see compelling long-term opportunities for BlackBerry 10, we have exceptional technology that customers are embracing, we have a strong balance sheet and we are pleased with the progress that has been made in our transition. As the Special Committee focuses on exploring alternatives, we will be continuing with our strategy of reducing cost, driving efficiency and accelerating the deployment of BES 10, as well as driving adoption of BlackBerry 10 smartphones, launching the multi-platform BBM social messaging service, and pursuing mobile computing opportunities by leveraging the secure and reliable BlackBerry Global Data Network.

JP Morgan Securities LLC is serving as financial advisor to BlackBerry and Skadden, Arps, Slate, Meagher & Flom LLP and Torys LLP are serving as legal advisors.

BlackBerry was sure to note that the exploration of a sale doesn't necessarily mean there will be one. The company won't be disclosing any further developments until a specific transaction is approved or the review is otherwise concluded.

Joe Rundle, head of trading at ETX Capital, said the move was no surprise, given the company's deteriorating smartphone market share (down to three per cent from five per cent last year) as Google and Microsoft crank up the competition and BlackBerry fails to evolve.

The question is who would buy Blackberry? Struggling sales, unsuccessful strategy and boring products means buying Blackberry could be a fatal move for any rival. Although the price-tag could be cheap and attractive for the likes of Samsung and Apple, there will need to be a big change of strategy to prevent the decline in sales. Blackberry’s selling point versus peers is that it’s security network framework is solid and a number of key patents but that may not be enough for the Apple, Samsung or Microsoft to bid for the company.

We may see a joint venture deal like that of Nokia and Microsoft but again, it’s unlikely we will see a tie-up with a bigger rival, rather a company looking to develop their smartphone product range. It’s speculated in the market that Facebook could attempt to launch a handset and Amazon may look to expand into the smartphone world following the success of the Kindle range. It’s more likely we may see the company go private as it gives management some breathing space to repair finances and implement a stronger strategy that matches up to its peers.

UPDATE: Shares jumped nine per cent on resumption of trading at 13:30. The Canadian dollar was unaffected.