No I don't have a crystal ball, it just made sense. Fairfax has now offered $4.7B for Blackberry and perhaps it can now stay Canadian! Prem has made several such bets in the past and for the most part he has been right. With $2.6B in cash and no debt, those Nortel patents bought for $770M, and a new plan to focus on just enterprise (how about their BYOD solution now installed in 25,000 corporations?), perhaps Waterloo will be able to keep it's high tech poster child, many of those jobs and influence. Plus there's the partnership with the University of Waterloo which could now continue. The Globe and Mail calls him "shrewd", and myself and the existing shareholders wish him all the best of luck in pulling together his consortium, finalizing their due diligence (Prem was a Board member after all) and closing the deal in 6 weeks!
If Stephen Elop had joined Blackberry as their new CEO instead of going to Nokia when he left Microsoft several years ago, Blackberry would not be writing off approximately $1B worth of unsold smartphones, laying off 4500 staff, and looking for a buyer. Instead, Elop would have replaced QNX's operating system (bought for $100M and renamed Blackberry 10) with Microsoft's Windows Phone operating system, and they would have been off to the races. One thing would have been the same - Blackberry's investors would have probably still seen the same decline in their net worth as did Nokia's. Microsoft would have then bought Blackberry for much less than the $7.2B they paid for Nokia, and still have been able to pay Stephen 70% of his severance of $26M (Nokia paid the other 30%) as he returned to Microsoft. The difference would be that Canada's Blackberry would have survived in some form as part of Microsoft. The Blackberry Z30 (their most recent high end smartphone) running Microsoft's WP8 - not to be! And now Blackberry's fate is in the hands of Fairfax.
First of all, congratulations to the Vancouver Sun for first publishing the Nokia announcement in their early Tuesday morning issue - the Globe followed suit at 11:49 EDT!
The news itself was not so surprising. Microsoft bought Nokia's mobile business, 32,000 employees and Stephen Elop, who is now safely back in the fold, for $7.2B. Nice move since this was from overseas funds which had been protected from US corporate taxes. Welcome back Stephen, and with a debt of gratitude for nixing Nokia's Symbian and adopting Microsoft's Windows Phone operating systems for Nokia's smartphones (sort of like a Trojan Horse?), are there any other openings at Microsoft that might be of interest?
I guess that leaves out a potential Blackberry purchase by Microsoft, sort of like Verizon's change of mind regarding their Canadian initiatives after spending $130B to buy out Vodafone's share of their mobile unit venture - that task is now left up to the Fairfax consortium. Don't blink, or you'll miss something big!!
Chartwell Principal David J Snell on Strategy, Sales, Marketing and High-Technology with a focus on Mobile.