BlackBerry has put itself in play, but at this point no one knows whether it will be taken private or possibly sold to a foreign company.
One thing is for sure, the company that created the smartphone, the pride of 91原创 high-tech, has fallen on difficult times.
And the question is, what can the federal government do to help? If BlackBerry CEO Thorsten Heins were having this conversation with Industry Minister James Moore, he would probably say something like: 鈥淛ust give us the flexibility to make the right decision for the company, the industry and the country.鈥�
That鈥檚 a pretty good message. The government鈥檚 role should be to help BlackBerry find a way through this, and help keep the company whole rather than broken up for its $3 billion in cash, its patents and its R&D. 91原创s have a certain amount of pride in BlackBerry, which has brought enormous value added to the 91原创 brand in nearly 180 countries.
It鈥檚 not as if we have a lot of world champions in this country. You can pretty much count the others on the fingers of one hand. Bombardier in aviation and rail transport. CAE in flight simulators and training. Barrick Gold in mining. Peerless in men鈥檚 clothing. And in financial services, the big five 91原创 banks, all in the Top 10 in North America in market capitalization and assets.
BlackBerry鈥檚 current market cap of nearly $6 billion, or about $11 per share, is nothing to sneeze at, but it was once nearly 15 times that, or $150 per share, in 2008.
Then along came the iPhone, and then the iPad. BlackBerry鈥檚 once-dominant share of the global smartphone market has since shrunk to three per cent. And its PlayBook tablet got killed. It didn鈥檛 have email or messaging at first. How did that happen? Apple鈥檚 Steve Jobs wasn鈥檛 an inventor, but he was a great designer, with an intuitive gift of giving consumers what they wanted before they knew what they wanted. Turned out they wanted smartphones they could play games on.
BlackBerry bet the future of the company on the rollout of the BlackBerry 10 last winter, but while the reviews were generally strong, sales have been weaker than expected.
And yet, in a business where a week is a long time and a year an eternity, it would be foolish to suggest BlackBerry is done. It has a strong cash position and no debt. It has global brand equity. It has a culture of innovation. And it is by far the largest private-sector R&D company in the country 鈥� the only $1-billion R&D player in the land.
And so, now what? And what of Ottawa鈥檚 role? BlackBerry has struck a committee to conduct a strategic review of its options. One of them is taking the company private, where it wouldn鈥檛 have the bother of quarterly earnings calls.
One potential buyer is Fairfax Financial Holdings, which owns nearly 10 per cent of the company. The investment company is controlled by Prem Watsa of Toronto, who resigned from BlackBerry鈥檚 board last week to avoid any conflict of interest. Both the Canada Pension Fund Investment Board and the Caisse de D茅p么t, through its CEO Michael Sabia, have expressed interest in investing in BlackBerry should it go private.
But any sale of BlackBerry to a foreign buyer would have to be approved by Industry Canada through Investment Canada. Microsoft has been said to consider bidding on BlackBerry in the past, and the smartphone segment might be a good fit.
A Chinese company, such as tech and telecom giants Huawei or ZTE, is another possibility. But any sale to China would be problematic for the 91原创 and U.S. governments, given the importance of BlackBerry鈥檚 security features.
And that鈥檚 not about whether a sale of BlackBerry meets the significant-benefit test of Investment Canada. It鈥檚 about national security, and rises to a much higher threshold of approval.
L. Ian MacDonald is editor of Policy magazine.
