BlackBerry Putting Itself Up For Sale?

Canadian smartphone maker BlackBerry, struggling to compete in a difficult market, has set up a committee to look at options, including joint ventures, partnerships or a sale of the company.

This is the strongest indication yet that the smartphone maker won’t remain independent as competition erodes sales and hammers its stock price.

A special board committee will consider ways to enhance BlackBerry’s value and scale, including joint ventures, partnerships or a sale of the company, according to a statement Monday. JPMorgan Chase & Co. will serve as its financial adviser.

BlackBerry shares gained as much as 9.1 percent in New York.

The announcement builds on a move last year when BlackBerry hired JPMorgan and RBC Capital Markets to advise the company on strategic alternatives. At the time, Chief Executive Officer Thorsten Heins said a sale wasn’t the “main direction” he was considering. Prospects have worsened since then, with the new BlackBerry 10 — the linchpin of a turnaround strategy — meeting scant demand.

“What BlackBerry is doing is the appropriate course of action,” said Charlie Wolf, an analyst with Needham & Co. in New York who has the equivalent of a sell rating on the stock. The likelihood of a sale is at least 50 percent, he said. “The other options are much less likely.”

Heins will join fellow board members Timothy Dattels, Barbara Stymiest, Richard Lynch and Bert Nordberg on the new committee. Fairfax Financial CEO Prem Watsa, whose firm is BlackBerry’s largest shareholder, will step down from the board to avoid conflicts that might arise from the discussions.

BlackBerry fired 5,000 workers last year as part of a plan to eliminate $1 billion in operating costs. Analysts had expected the cutbacks to help the company post a profit last quarter. Instead, BlackBerry lost $84 million, dragged down by the lackluster sales of the BlackBerry Z10. The new touch-screen phone, introduced at a lavish event in New York in January, missed estimates by almost a million units last quarter. The company is projecting another loss for the current period.

Last month, Heins reiterated that the company was seeking partners to expand the footprint of its BlackBerry 10 operating system and help with its turnaround. After pioneering the smartphone market, the company has struggled to compete with Apple Inc. and Samsung Electronics Co. in recent years, dragging its market share down below 3 percent.

Culled From BusinessDay.