BlackBerry (NASDAQ:BBRY) Partner Tech Data (NASDAQ:TECD) at Risk of Being Delisted, Other Partners under Pressure
TAMPA, FL – Earlier this week, Tech Data Corporation (NASDAQ:TECD) received a warning letter from the exchange notifying the company that it is out of compliance with the rules regarding the filing of periodic reports on the Securities and Exchange Commission. According to the Tampa Bay Business Journal, the company has been working on restating its financials since March of this year.
With the company out of compliance, they face a significant risk of being delisted unless the company asks for a hearing – which Tech Data said it would do. According to NASDAQ’s rules, a hearing will stay delistment for 15 calendar days. Tech Data claims the delay in releasing financial statements is due to improprieties related to how its subsidiary in the United Kingdom reflected vendor accounting.
The Clearwater, FL-based Tech Data is just one of several companies reeling from the disintegration of BlackBerry (NASDAQ:BBRY). Along with Ingram Micro (NYSE:IM), and Intcomex (NASDAQ:ICMX), Tech Data was a vital part of BlackBerry’s value chain. Rumors have spread that many of BlackBerry’s suppliers and distribution partners could face a credit downgrade, especially if the company exits the handset market. In particular Jabil Circuit (NASDAQ:JBL) has been linked to the downgrade rumors, but Moody’s claimed on Monday that this was not the case.
According to Gerald Granovsky, Moody’s Senior Vice President, ‘if BlackBerry exits the handset market, we estimate that Jabil Circuit would lose around $ 2.1 billion in revenue in the first year, and Brightstar about $1.2 billion over 12 to 18 months, but these declines would not affect the companies’ ratings because both have reduced their exposure to BlackBerry over the past few years.’ Both Jabil and Brightstar are contract manufacturers.
While on Monday, S&P analysts noted an unconfirmed Reuters article from last week that mentioned several big electronics companies with exposure to BlackBerry, including Cisco (NASDAQ:CSCO). The report stated that S&P believed that if the Fairfax Holdings offer to purchase BlackBerry were to fall through several of these companies would face issues and that some of the exposed companies might step up with their own offers in an effort to reduce their risk. In Cisco’s case, this would mean acquiring BlackBerry’s software or security operations.