Blackberry Dying – Apple, Vultures Circle

Blackberry in trouble

Blackberry is in trouble, serious trouble.  It’s dying. The company revolutionized the cell phone market with its, at the time, high end phone. Before the term “smartphone” even existed the Waterloo, Ontario company weaved its way into the mainstream of popular culture. Athletes had them. The cool kids had them. Politicians and businessmen would sell out their mistresses for Blackberry. Their cellphones provided users with internet access and a texting interface utilizing a small physical keyboard that resembled that of a computer as opposed to a clunky, frustrating interface mimicked traditional phones (Three letters crammed under one number). Sometimes though, revolutionaries are consumed by the very paradigm shifts they create. Blackberry is in its death throes, and the vultures are circling. It’s hemorrhaging money, 1 billion in quarterly losses, all over the stock market floor.

Recently, Apple invited Blackberry employees to attend, what was essentially, a headhunting party. Apple used LinkedIn to send out invites to the Blackberry workers, and Apple offered them a sweet deal. The Cupertino based company vowed relocation and immigration assistance for those willing to move to its California operations. One could hardly blame the Blackberry faithful for considering the offer. The Canadian company announced it would shed its work force by a whopping 40%. Why wait around to see whose headed for the guillotine?

Meanwhile, the Blackberry Co-founders are locked in a bidding war to save the company. They may place a bid on the vast majority of the company, 92% of which they don’t control. This is by no means an easy fight. Mike Lazaridis and Douglas Fregin could use some partners with very deep pockets. So far, they’ve only briefly flirted with the likes of The Carlyle Group and The Blackstone Group. At this point, the negotiations are fruitless.

What should alarm anyone employee still working for Blackberry, and send them screaming into the welcoming arms of Apple, is the involvement of Cerberus Capitol Management. Cerberus belongs to a cadre of private equity firms, Like Mitt Romney’s Bain Capital, known for vulture capitalism tactics. If Cerberus is looking for a leveraged buyout, Blackberry may find itself loaded with debt. To resolve that debt it will either have to undergo massive restructuring.This will include slashing existing benefits and making deep cuts to the workforce The other option? Bankruptcy. The take over my be friendly. The take over may be hostile. Either way, the results are the same. The private equity firm makes money hand-over-fist, and employees are fired.  Matt Taibbi reports Cerberus “drove one of its targets into bankruptcy after saddling it with $2.3 billion in debt.”

It’s easy to view Apple’s behavior as that of a sore winner, rubbing salt in the gaping wounds of a dying competitor. However, one should consider Apple’s reputation for prescience, staying ahead of the curve. If Apple realizes what’s in store for Blackberry, if it anticipates the imminent bankruptcy of its rival, then the tech industry would see an influx of some very smart and experienced people. Considering that Waterloo, Ontario is a hotbed of tech start-ups and Google is opening up a Motorola facility in the area. Apple has a choice, do nothing and let that workforce be absorbed by its competitors or be proactive, thereby, absorbing Blackberry employees before the vultures have a shot.

Written By David Arroyo

 

Apple throws recruitment party

2 Founders of Blackberry

Greed and Debt

Leave a Reply

Your email address will not be published.