Will Facebook (NASDAQ:FB) buy Blackberry?
NEW YORK – The Wall Street Journal has reported that Blackberry executives flew to California to meet with representatives for Facebook (NASDAQ:FB) in an effort to gauge interest in a potential bid for the once-dominant smartphone-maker.
While it remains unclear whether Facebook will enter a bid for Blackberry, any offer would be an alternative to the $ 9 per share from a group of investors including Prem Watsa’s Fairfax Financial Holdings (TOR:FFH). Fairfax is Blackberry’s largest shareholder and their offer would total $ 4.7 billion to take Blackberry private.
According to reports other companies have expressed some interest in Blackberry including, Cisco (NASDAQ:CSCO), Google (NASDAQ:GOOG), and Microsoft (NASDAQ:MSFT); however, it remains to be seen whether any of these companies would actually make a move for Blackberry.
Meanwhile, Blackberry announced on Tuesday that the company would layoff another 300 employees as part of cost cutting measures. According to a statement emailed by Rebecca Freiburger, ‘We are in a period of transition and we must focus on enhancing our financial results to be in a better position to compete in this current mobile environment. We recognize our local employees’ hard work on behalf of our company and the difficulty of this news.’
The company said that it expects to lose another $ 400 million before May 2014 due to the cost of severance payments for the layoffs, as well as reworking its smartphone lineup and other changes to its manufacturing, and sales and marketing operations.
Whether Facebook will acquire Blackberry remains to be seen, while there is some value in Blackberry’s patents, especially Blackberry Messenger it might not be enough to justify purchasing the entire company. Ultimately, why would Facebook want to become a device company? In fact, a better move might be to position themselves as the anti-Google, that is working with companies such as Samsung (KS:005930) to develop subsidized smartphones for the consumer market. A move in this direction would attack weakness in the business plans of Google and Microsoft, who have made a play to become smartphone developers.
For Blackberry, the future is grim indeed. While another investor could surface before Fairfax’s offer is set to expire, it appears to be increasingly unlikely. Privatizing the company could help, but ultimately the Canadian Government will most likely be called into provide support, either through a facilitated bankruptcy or loan guarantees to give the struggling company any chance at recovering.