In Focus: Finance
Articled Retrieved from: http://www.cbc.ca/news/business/fairfax-has-no-comment-on-blackberry-deal-as-deadline-looms-1.2325341
Picture retrieved from: http://www.gadgetsmagazine.com.ph/wp-content/uploads/2013/09/blackberry-new-logo.jpg
Just weeks ago FairFax Financial announced its intent of a $4.7 billion buyout of Blackberry. There are now doubts of whether this transaction will go through as they recently reported a net loss of $571.7 million. Buying over Blackberry is a high risk, high return strategy for any potential buyers as the smartphone industry is extremely competitive and capital intensive with the amount of R&D required to compete with other smartphone giants such as Apple and Samsung. Considering the current financial situation FairFax is at, they are probably not the best investors to help Blackberry get back on track. However, if they manage to pull through with this investment, the returns are high as the smartphone industry is a highly lucrative one. At present, I doubt the success of the transaction as (1) risks are too high (2) returns have limited guarantee (3) successful transactions always boils down to financial status. There were analysts that believe Blackberry should discontinue their smartphone line and focus on software development to ensure the survivability of the business. I agree with this proposal as the struggling company needs to drop commitments and focus on key strengths in order to survive for the long run.
Update/Extra readings:
Blackberry should stop selling Blackberry: http://www.v3.co.uk/v3-uk/analysis/2304974/blackberry-should-seek-survival-in-software-and-services
BlackBerry might be sold to FairFax Financial: http://www.cbc.ca/news/business/blackberry-to-be-sold-to-group-led-by-fairfax-financial-1.1864922
Buying time for BlackBerry: http://www.cbc.ca/news/canada/blackberry-takeover-offer-buys-company-time-1.1865640
Smartphone market worth $341.4 billion by 2015: http://www.prweb.com/releases/mobile-phone-market/smartphone-market/prweb11242089.htm