BlackBerry delays release of financial information amid Fairfax negotiations

Q10 holding

For all the trouble surrounding BlackBerry, its management is not made up of fools. A conference call scheduled for Friday with analysts and investors, to discuss the company’s quarterly financials, has been cancelled. The smartphone manufacturer is likely delaying the public release of financial information so as to not negatively impact the negotiations of a potential takeover from its largest shareholder: Fairfax Financial Holdings.

BlackBerry said that it would still release the quarterly results, but the cancelled call buys it precious time while Fairfax completes its due diligence. According to the New York Times, a written report from BlackBerry’s management on its financial condition would also not be available until next week.

It is well known that BlackBerry has been in financial trouble, but the release of BlackBerry 10 phones earlier this year was expected to be its saviour, and give investors some reassurance. However, as the New York Times notes, BlackBerry issued a pre-release announcement last week that alluded to a loss of around US$1-billion for the quarter, with revenue lower than analyst’s predictions too.

This indicates that BlackBerry 10 has not been able to win the hearts of consumers, and has left the smartphone maker in a precarious position. The company has announced plans to lay off 40% of its workforce, which the New York Times states is around 4500 people.

Fairfax, which owns around 10% of BlackBerry, has signed a letter of intent to acquire BlackBerry at US$9 per share, pending due diligence. If the deal went through BlackBerry would be valued at US$4.7-billion.

BlackBerry probably wants to limit its share price fluctuating during the negotiation. While the company remains public, and at the whim of shareholders buying and selling, it seems intent on protecting that potential deal (and any competing offers) by withholding any public information.

Fairfax’s due diligence has been dubbed to take around six weeks, so it will be interesting to see whether BlackBerry can delay for that long, and if not, how its current valuation is affected.



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