BlackBerry’s decline continues as T-Mobile will no longer stock devices
SHARES in BlackBerry continued to fall ahead of its earnings report today on doubts about a $4.7bn bid to take the smartphone maker private, and after a big US carrier said it would stop stocking BlackBerry smartphones in its shops.
In an announcement that highlighted the faded relevance of the company that pioneered on-the-go e-mail, T-Mobile US said it was no longer efficient to keep BlackBerry devices in its shops. However, TMobile, the fourth-largest US wireless provider, will still ship BlackBerrys to customers who want them, most of them business users, said David Carey, its executive vice-president for corporate services.
The announcement from TMobile, which competes aggressively on price and is better known for consumers than for business customers, followed BlackBerry’s news that it is pulling back from the consumer market, where it has bled market share to Apple’s iPhone and devices using Google’s Android software.
BlackBerry, which put itself on the block last month, on Monday accepted a tentative $9 per share
It has landed on hard times but we think it will flourish over time in a private setting, where … management can focus on building it
offer from a mostly Canadian consortium led by domestic insurer Fairfax Financial Holdings, BlackBerry’s biggest shareholder with a 10% stake.
BlackBerry says its second-quarter results will feature slumping sales, a big operating loss and hefty job cuts. It reports results today, but it cancelled plans for a conference call with investors because of the Fairfax bid.
BlackBerry’s Nasdaq-listed shares ended Wednesday at $8.01, almost a dollar below the Fairfax group’s offer price.
They rose slightly in aftermarket trade after Fairfax CE Prem Watsa, a savvy investor often described as Canada’s answer to Warren Buffett, said he was confident the proposed deal would go ahead.
“It has landed on hard times but we think it will flourish over time in a private setting, as a private company where there is no speculation as to what happens every quarter or every six months and the management team can focus on building it over the long term,” Mr Watsa said.
Fairfax does not plan to contribute more than its existing stake in BlackBerry and has left itself the option of withdrawing the bid after reviewing BlackBerry’s books and operation.
“I don’t think people see it as a real bid,” said Eric Jackson of hedge fund Ironfire Capital, who closed a small position in BlackBerry after its June earnings report. “It wasn’t a firm offer and Prem can walk away from the deal at any time with no penalty.”
Mr Watsa is personally seeking more than $1bn from several leading Canadian and US pension and private-equity funds to support the $4.7bn bid, the Globe and Mail said on Wednesday, citing people familiar with the talks.
“Prem Watsa has to come up with other interested parties and to me it’s a pretty unappetising deal,” said Barry Schwartz, portfolio manager at Baskin Financial Services in Toronto, which does not own BlackBerry shares. “It would be more appetising if Prem was putting up more of his own cash to make the deal.”