BUSINESS

BlackBerry Q5 On Sale In Canada Amid Speculation On Company's Future

08/13/2013 10:06 EDT | Updated 10/13/2013 05:12 EDT
TORONTO - The latest smartphone from BlackBerry hit store shelves Tuesday, a day after the Canadian tech company announced that it was exploring several "strategic alternatives" including its possible sale.

BlackBerry (TSX:BB) shares closed up 19 cents or about two per cent at $11.32 on the Toronto Stock Exchange after rising as high as 10 per cent earlier in the session.

Rumours began circulating last week that the Waterloo, Ont., company could be scooped up by an interested buyer or even go private following a report that said BlackBerry's board was considering it as an option.

CIBC analyst Todd Coupland suggested BlackBerry could be worth as much as $20 per share in a takeover scenario.

He said likely buyers may be another mobile company such as Apple or Samsung, a company looking to increase or grow in the smartphone market such as Amazon, Dell or HP, or a company looking at BBM as a social media tool, such as Facebook.

"Another real option would be an attempt to take Blackberry private," Coupland wrote.

"(Fairfax Financial chief executive) Prem Watsa who holds approximately 11 per cent of BlackBerry could very well be seriously considering joining a bid to take BlackBerry private. Private equity firms that could be involved include Silver Lake Partners and CPPIB, and there are very likely others."

Watsa resigned from the BlackBerry board on Monday due to a potential conflict of interest, suggesting Fairfax may be interested.

Watsa joined the board in early 2012 as part of several attempts to revitalize BlackBerry, as its long-time co-CEOs stepped aside and installed Thorsten Heins as chief executive.

Scotiabank analyst Gus Papageorgiou said he believed there was a "high probability" of a deal and estimated a bid of about $14.20 was possible.

Papageorgiou estimated that the cash and patents at BlackBerry were worth about $10.16 per share including $5.90 for the cash and $4.26 for the patents.

"We do not believe anyone will pay up for the handset business but the service revenue and QNX have value. We conservatively value these assets at $4.00/share," he wrote in a report to clients.

BlackBerry's strategic review will be headed by Timothy Dattels, who joined BlackBerry's board last year and is a senior partner at TPG Capital, one of the world's largest private equity firms.

BlackBerry founder Mike Lazaridis will also be involved, as he still owns 5.7 per cent of BlackBerry's outstanding shares. However, former co-chief executive Jim Balsillie — who, along with Lazaridis was instrumental in building BlackBerry — sold his stake in the company last year, according to regulator documents.

The BlackBerry Q5, which runs the company's new operating system, follows up to the original Q10 keyboard model and the Z10 touch-screen model that were introduced earlier this year. It had already been available in other countries but not in Canada.

The Q5 phone was originally targeted at Europe, the Middle East, Africa, Asia and Latin America, but the company recently decided to add Canada to the list.

BlackBerry also announced Tuesday it plans to launch another new device that will run the company's old operating system — for Asia, Europe, the Middle East, Africa and Latin America.

The first-round of Blackberry 10 phones, the Z10 and Q10, have struggled against the latest iPhone and Android devices.

And, the Q5, which was launched last month, has been greeted with underwhelming reviews and anecdotal sales figures that fell short of expectations, though official data hasn't been released by the company.

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