BlackBerry’s privatization makes sense, but it is not a real solution – analysts

By IVCPOST Staff Reporter

Aug 10, 2013 11:13 AM EDT

According to private equity analysts, it would make sense to create a deal that would take BlackBerry private based on a financial standpoint. However, they pointed that such move would not make the smartphone maker more competitive.

BlackBerry was reported to be open to a leveraged buyout. The company's shares have been plummeting while the sales of its new line of mobile devices have also failed to live up to analysts' expectations. Just two months ago, BlackBerry reported that its international subscriber base shrank to 72 million in the first quarter, down by 4 million from last year. The Waterloo, Ontario-headquartered corporation's global market share dropped from 4.9% in 2012 to 2.9% in the second quarter of 2013.

BlackBerry's current worth is said to be around US$5 billion but several of its venture capitalists like Ross Healy of MacNicol & Associates said the corporation has more than US$3 million in cash alone. "My own analysis tells me that the stock is worth an awful lot more than $5 billion," Healy said. Nonetheless, the executives and analysts contended that there was no clear way to reorganize BlackBerry in the aftermath of any leveraged buyout.

"The problems don't change whether you're private or public," Edward Snyder, an analyst from Charter Equity, stated. "You're facing the same set of problems. It just comes down to whether or not one of the two structures is better set up to solve them."

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