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September 24, 2021

Is this finally the beginning of the end for BlackBerry?

After announcing that it would lay off close to half of its workforce and getting killed by last week’s whopper of an earnings warning, struggling smartphone maker BlackBerry may soon be acquired by a consortium led by its biggest shareholder, Fairfax Financial.

The going-in price? $9 a share -- way way below BlackBerry's price in the years before the iPhone ate its lunch

The company's shares closed below that number, however, suggesting that investors don't see much upside just yet despite trading volume that was close to triple the daily average.

Fairfax CEO Prem Watsa, who has a longstanding reputation as a value investor, plans to take a page out of Dell's book by taking the company private and refocussing it on the business market.

But that's not going to be easy.

The hope is that pulling away from the stock market's glare will ease pressure from investors and give the struggling firm time to concentrate on the "prosumer" market that it once dominated. Under Fairfax, for instance, BlackBerry wouldn't need to release an innovative device every few months to keep up with the likes of Samsung and Apple.

If that doesn't work, however, this is likely the last gasp for what was once an iconic brand in mobile technology, analysts suggest.

"Can BlackBerry ultimately survive? That's not as clear," says research firm J. Gold Associates. "But given six to 12 months of 'under the cover' ability to do what is needed, it could be a much more attractive acquisition target at the very least."

Some analysts, pegging the true vale at closer to $12 a share, believe a competing bid may still be possible, possibly led by BlackBerry co-founder Mike Lazaridis.

But Global Securities strategist Elvis Picardo isn't one of them: "I would think a competing buyout offer is quite unlikely. The miniscule premium, and the muted market reaction, is another indication that the market views the odds of a competing bid as slim."

Even a competing bid would be cold comfort for loyal investors, maintains the New Yorker's Vauhini Vara: "There’s a difference between a product that persists among a relatively small group of diehard loyalists and one that, like the iPhone, is deeply embedded in consumer culture."

"Even if BlackBerry technically exists for some time, it’s unlikely to ever again capture us the way it did in its early years." 

Is this the last gasp for another Canadian technology company? Or do you feel that BlackBerry can rebound once again?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...