After the struggling smartphone maker had announced that it would be recording $400 million in pre-tax charges because of the cuts announced the previous month, BlackBerry saw the slide in BlackBerry shares price reverse because of the possibility of a second offer. BlackBerry has put itself on the block from August after it had bled out market share to other companies in the smartphone market. A person close to the matter stated that an offer for BlackBerry might be made by Cerberus Capital Management LP, a private equity group. Cerberus had also been named by Wall Street Journal earlier as one of the two companies that go for distressed investing and may give BlackBerry a look.
The name of the second firm was not provided. According to some of the sources of the Wall Street Journal, Cerberus would get access to the private financial information of the Canadian smartphone maker by signing a confidentiality agreement, but this was no guarantee that it would actually make a bid. No comment was made by Cerberus regarding this matter. The price of BlackBerry shares that had declined 5% this season was up by 1%. By mid-afternoon, the stock had reached $8 that was still less than $9, a share offer that has been made a consortium that’s led by Fairfax Financial Holdings Inc., the Toronto insurer who wishes to privatize the smartphone maker.
The tentative $4.7 billion offer that was made by Fairfax the previous month was accepted by BlackBerry that has been unsuccessfully competing against the devices of Apple Inc. and those based on Google’s Android Operating system. A BlackBerry spokesman stated that the company wasn’t willing to discuss any developments until a specific transaction was reached or until it had reviewed all the strategic alternatives available. Previously, known as Research in Motion Ltd, the Waterloo-Ontario based firm had been founded by Mike Lazaridis.
The little wireless devices of the company had provided executives, lawyers and politicians another way of accessing their emails when away from the office. Lazaridis is still a major shareholder, but he left the company last year. Slumping sales and a huge loss had been reported by BlackBerry last week in the latest in the long line of underwhelming results. In order to reduce its operating expenses by half, the company stated that it would be cutting about 40% of its workforce. When these results had been reported by the company, it had stated that it would be updating its 2013 outlook in a filing.
The latest filing comprises of the $400 million charges and it is expected that the company would be taking those charges over the remainder of this fiscal year and in the first quarter of the next. In another blow for the company, it also reported that government and corporate customers that formed its loyal base have also been considerably slow in adopting its new servers that allow them to manage all their devices, whether BlackBerry, Android or even Apple devices. The Canadian firm may also become an interesting target with proceeds of real estate sales.