A Canada-based insurance firm plans to buy BlackBerry for $9 per share, or $4.7 billion, but taking the struggling mobile device maker private looks likely to fail, according to one industry analyst.
That's because getting BlackBerry off Wall Street still "doesn't solve the fundamental problems at the company," said Jan Dawson, chief telecoms analyst at research firm Ovum.
Those problems amount to "cratering" device sales, Dawson said, as smartphone pioneer BlackBerry falls far behind rivals Android, iOS and even Microsoft.
So for Fairfax Financial Holding Ltd., which already owns about 10 percent of BlackBerry, to agree to take on the struggling company seems risky. In fact, Fairfax has not made a full commitment to a BlackBerry purchase – it doesn't even have financing secured yet. The company has until Nov. 4 to perform due diligence, which also allows BlackBerry time to seek another potential buyer.
Of course, in a press release, Fairfax expressed nothing but optimism about the pending transaction.
"We believe this...will open an exciting new private chapter for BlackBerry, its customers, carriers and employees," Prem Watsa, chairman and CEO of Fairfax, said in a press release. "We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world."
Dawson's not convinced.
"Normally, companies are taken private in order to give a long-term strategy time to pay off without the hassles of short-term investor scrutiny," Dawson said. "But BlackBerry's key problem for the last couple of years has been the lack of such a long-term strategy. It simply hasn't articulated a way to rebuild its business as its device sales drop precipitously. Unless Fairfax plans to radically change or accelerate BlackBerry's strategy, it's unlikely to be able to turn the company around. And that means we're likely seeing the beginning of the end for one of the most iconic brands in mobile technology."