The Canadian company once known as Research In Motion announced Monday that it is nixing a $4.7 billion buyout by Fairfax Financial. Instead, it is going to try to raise $1 billion by offering a convertible note. As well, the company is going to make some major changes in its leadership. One of those leaving will be CEO Thorsten Heins.
BlackBerry is saying this is "a vote of confidence" in the company's future. The markets so far seem to disagree. Before the stock's trading was halted Monday morning, shares of BlackBerry dropped nearly 19%. The company's market capitalization is now $3.4 billion. Its stock has lost 95% of its value since June 2008.
The current situation at BlackBerry is eerily reminiscent of another device maker from not-so-long ago. A Palm personal digital assistant (PDA) was once the must-have for Type A middle managers at the turn of the millennium. However, Palm found it tough to compete when other manufacturers came up with their own operating systems and included telephony with their PDAs. One of those competitors was Research In Motion and their BlackBerry devices. Pam was ultimately bought by Hewlett-Packard for $1.2 billion in 2010, close to half of its value four years before.
Though BlackBerry was considered the pioneer in the smartphone segment, its attempts to take on tech giant Apple and devices running on Google's Android operating systems have fallen flat. Its Z10 and Q10 smartphones, released earlier this year, didn't sell as much as the company had hoped.
Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, believes that even BlackBerry's stock chart today looks like that of Palm's in 2010. "Today, [BlackBerry's] stock does find some support back where we bottomed last year in September, around $6" says Ross. "I could see maybe another dollar or so upside but you're just looking for a greater fool to come in and see value where the market doesn't see it. For me, that's not where I'm putting my money."
CNBC contributor Gina Sanchez, founder of Chantico Global, sees BlackBerry's corporate customers as leaving. "Their biggest market was selling into the corporate enterprise sales market so that whole companies were buying BlackBerrys," says Sanchez. "Now you're seeing companies like Morgan Stanley stepping back from that commitment."
While she believes the stock may well go down from here, Sanchez does not think all is lost. Besides intellectual property, the company does have one product that may live on long after the company itself.
To hear what BlackBerry product Sanchez believes can survive and to see Ross' charts comparing Palm to BlackBerry, watch the video above.
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