There have been proposals to abolish or at least modify the “net benefit” test. Anything else, whatever conditions politicians think to attach to it, amounts to an expropriation of a part of their assets, since anything that adds to the cost of the acquisition makes the company that much less valuable to the purchaser, and thus will come out of the price they are willing to pay. If they are willing to part with their shares, it is because they have been offered at least as much for them as they think they’re worth - the only “net benefit” that matters. The point remains: the owners of a company are the owners of the company. So before the inevitable nationalist caterwauling begins over the prospect of this “Canadian icon” falling into foreign hands, it would be worth asking, at the least, what realistic alternative there is. If RIM has hope of rescue, it will almost certainly come in the form of a tech heavyweight like Microsoft, that is to say from outside our borders. Even in its present state, the company is probably worth in the neighbourhood of $4-billion, putting it out of reach of most Canadian buyers - certainly any that made any kind of strategic fit. The question is who - or perhaps more to the point, where.
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While it hopes to license its operating system to other makers, the broader options would seem to be the same as that rude analyst suggested: sell the company outright break up its network and hardware operations, with a view to selling one or both or wind up the company and sell off the assets, a la Nortel.Īll of these have one thing in common: they require a purchaser. It is currently conducting a strategic review, with the help of outside advisers. But to do so it will very likely need to make big changes, as the company itself concedes. This advertisement has not loaded yet, but your article continues below. The company has just three options, one said: “sell, break up the company, or die.” Market reaction was, given the circumstances, subdued: a mere 20% decline in the price of the company’s stock, already down more than 70% over the last 12 months. Worst of all, the company admitted the new BlackBerry 10 system it has been touting as its salvation will not be ready until next spring - just in time for the crucial Easter shopping season.In the meantime, its rivals will have brought to market their own “next-generation” products, making less plausible the company’s claims that it can “leapfrog the industry.” Indeed, given the losses the company is likely to sustain in the interim, it may not even survive long enough to deliver it. Revenues of just $2.8-billion, down 43% from a year earlier. A loss of $518-million (U.S.) for the first quarter, the first in nearly eight years. The results the company posted Thursday were worse in every way than anyone had forecast - and the forecasts were awful enough. Look at it this way: at least RIM beat expectations.
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