With incessant reports of impending doom, BlackBerry is in full-fledged damage-control mode, seeking to reassure the public that it is still healthy despite ?challenging times.?
The company made an unusual move last week, writing an open letter to its customers that it posted on its website and published in 30 newspapers around the world. In it, BlackBerry said ?we don?t underestimate the situation? and added that it was ?making the difficult changes necessary to strengthen BlackBerry.?
But technology analysts and even some long-time BlackBerry fans aren?t buying it.
?The future is very uncertain,? said Amitabh Passi, senior research analyst at UBS. ?I still remain fairly skeptical of the long-term prognosis of the company.?
The smartphone pioneer, which has endured an especially rough few months, appears headed for a buyout or breakup after years of sales declines.
Although BlackBerry has struck a tentative deal to be bought by a Canadian insurance company, tech watchers say a takeover isn?t a guarantee that BlackBerry will be able to turn itself around. Its brand has been deeply hurt amid lackluster sales and flagging support from consumers, manufacturers and retail partners alike.
BlackBerry is trying to figure out its next steps. It announced last month that it had reached a preliminary agreement to be bought by a consortium led by Fairfax Financial Holdings for $4.7 billion. The group plans to take the company private.
Both sides are doing their due diligence, with a plan to negotiate and execute a definitive transaction agreement by Nov. 4.
BlackBerry cautioned that other prospective buyers could emerge, and indeed, co-founders Mike Lazaridis and Douglas Fregin said in a regulatory filing earlier this month that they were considering a bid for the company, based in Waterloo, Canada.
At the same time, analysts have speculated that a buyout might fall apart, forcing BlackBerry to sell its assets to industry rivals. Google, Lenovo, Cisco, SAP and even Samsung have been rumored as potential buyers for bits and pieces of BlackBerry?s business, although those companies have not publicly expressed interest.
As it grapples with a probable ownership change, BlackBerry continues to lose money. Last month it disclosed that it lost nearly $1 billion in its most recent quarter, and said it planned to lay off about 4,500 employees, or about 40 percent of its workforce.
The company?s stock is down nearly 30 percent this year.
With so much noise surrounding the company, BlackBerry slammed the ?dramatic headlines? in its open letter and said it was ?important that we set the record straight on a few things.?
But the prolonged uncertainty is having an effect on loyal BlackBerry users such as Kiran Sajwani, a recent business school graduate from Toronto.
?I think the rumors have a ripple effect,? the 30-year-old said. ?All of them combined do have an impact on the user in terms of deciding, ?Do I want to stick with it or do I want to get another device?? ?
Sajwani?s BlackBerry Curve 9300 recently began having problems, including screen freezing, trackpad issues and poor battery life, she said. She?s been faithful to the BlackBerry brand for five years but said, ?I think my journey with them is ending.?
?While I still love my device, I think I may need to say goodbye to it soon,? she said. ?It was a joke between my friends and I that the phone seems to be mirroring the fortunes of the company.?
BlackBerry has been adamant that it will stay in business and said in its open letter that it has substantial cash on hand ? about $2.6 billion ? and a balance sheet that is debt free. It plans to restructure, with a goal to cut expenses 50 percent.
But even its cash position is shaky, said Scott Thompson, an analyst at FBR Capital Markets.
?BlackBerry, even though it has a lot of cash, doesn?t have as much cash as it might take to operate through the next 12 months if the purchase commitments that they?ve made to their suppliers actually come due,? he said. ?At this point they need to do something drastic to turn the organization around.?
BlackBerry declined to make executives available for comment, but a spokeswoman said in an email that ?it remains our top priority to continue serving all our customers.?
Whatever happens next for BlackBerry, several analysts said they?d like to see the company shed its device-making business and focus on business customers and on software services that can run on competitors? platforms.
If that happens, BlackBerry phones would slowly fade from the consumer marketplace, but remnants of the company ? such as BBM, BlackBerry?s popular messaging service ? would still be available on other devices.
Source: MCT Information Services