The recent bidding war for BlackBerry (BBRY), the troubled smartphone maker based in Canada, has failed and it isn't certain if its latest move to fire its CEO Thorsten Heins and raise $1 billion in new funds from institutional investors that includes Fairfax Financial Holdings Limited (OTC:FRFHF) can help the company reclaim its success. Really, things have been falling apart for BlackBerry in the last few years in so many ways and the biggest is the inability of the company to attract users with its brand of smartphones; including the latest smart devices it released to the market recently. BlackBerry is a tech company that was once regarded as a mighty tech icon but it has been struggling to no avail for years to catch up with its close competitors like Apple (AAPL) and Samsung (SSNGY) and win back the initiative for making mobile devices that are acceptable to consumers. I wish BlackBerry survives this moment of trouble and I wish its shareholders do not lose their entire investment in this tech company that is fast becoming moribund but at this moment; the future is uncertain for BlackBerry and its shareholders.
BlackBerry's bidding War Saga!
In the last few months, the board of directors of BlackBerry had taken a shot at a number of options to sell the company but none of those attempts succeeded. BlackBerry tried its luck with M&A but it failed. Fairfax Financial Holdings, one of BlackBerry's major shareholders, tried to buy the company over for $4.7 billion but the plan didn't firm up due to the inability of the Fairfax to finance the bid. Also, there were speculations that Cisco Systems (CSCO) and other giant tech companies like Google (GOOG), SAP (SAP) and Facebook (FB) were warming up to either buy over BlackBerry outright or in part or save the company from its declining fortunes via possible joint venture agreements in line with the options laid bare by BlackBerry but none of these materialized. Even a few days ago, Cerberus, a private investment company, and Lenovo (OTC:LNVGF), a Chinese firm that is renowned as the world's top PC vendor, were still being rumored to be keen on making an offer for BlackBerry. However, an attempt to buy BlackBerry by Lenovo was specifically reported to have been blocked by the Canadian government.
For investors who have been following the scenarios surrounding BlackBerry in the last six months without allowing emotion to play out itself on them, the latest news shouldn't be a surprise to them. Unfortunately, many people including this author, were fascinated by the supposed fortune that lies beneath the entity called BlackBerry but none of the numerous suitors linked with the purchase of this company were moved by the supposed fortune. It seems to me that the supposed suitors of BlackBerry must have seen something in the company that scared them off the purchase transaction. Or could there have been some inherent factors like regulatory constraint that kept these suitors away from BlackBerry like what happened with the attempted acquisition of Allstream by Accelero Capital Holdings?
BlackBerry's Stock Performance and Its Current Standing in the Mobile Market
Between Monday, November 4 when the news were made public that BlackBerry was longer available for sale and Tuesday, November 5 (as of this writing), the price of the stock has lost about 16%. Also, since the beginning of 2013, the BlackBerry stock has declined by about 65%.
In addition, BlackBerry continues to lose its market share. For example, a recent report released by ComScore, a research company, shows that BlackBerry's market share has declined by 0.8% in August of this year to 4.0% compared to a market share of 92.3% jointly controlled by Android and iOS systems.
With the current state of BlackBerry and the plan by the company to take itself off the acquisition table, it will be illogical to predict that the company has a bright prospect for its existing shareholders. Therefore, if you ask me if there is any hope for BlackBerry's shareholders, I will simply say none at the moment. Even if the new plan of the company happens to be fruitful, I don't see the stock gaining upside or yielding any significant return to shareholders anytime soon.
I would only advise any investor willing to stake their hard earned money in buying BlackBerry stock at this time to be ready to set a stop loss of $0 for the investment. HOLD.