Should BlackBerry Go Private? Recent R&D Layoffs Suggest It Might Be Time

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Recently, BlackBerry laid off 250 employees, some of which were located in the Research and Development department of the company. During a phase of the company when they should probably be investing more dollars in R&D in order to come up with the next generation of consumer electronics, the company is scaling back. One reason the company may be scaling back is a consequence of being a publicly traded corporation. Public companies are often at the behest of Wall Street to meet quarterly earnings expectations and this short term focus can reduce prioritization of longer-term departments such as R&D. Does this mean being a publicly traded corporation is not in BlackBerry’s best interests?

BlackBerrysign-BBED

This is a great quote from Investopedia that sums up why BlackBerry should be investing in Research and Devlopment:

“Healthy levels of capital expenditures and research and development are often critical to the long-term success of a company as it seeks to differentiate its product and service offerings and make its position in the marketplace more competitive.”

Sound familiar?

I’ll be the first to admit I don’t know all the details of how a publicly traded corporation goes private, but I suspect the biggest hurdle is raising the money to buy out shareholders.

Currently, BBRY stock sits at 8.89 with a market capitalization of $4.58 billion. That doesn’t seem like an impossible amount of money to raise. I’m sure employees alone could make up at least a quarter of that sum. Through investment banks and high net worth investors, the company could raise the money needed.

Once the company is bought back, it would likely alleviate many of the headaches BlackBerry has been facing. A volatile stock price, constant negative press due to Wall Street and analyst reactions and an ability to invest dollars where they’ll help the company be the most competitive.

Read more about why public companies go private on Investopedia.

Read more about the recent layoffs at this link.

Thoughts?

  • KnowYourRightsFool

    I think Blackberry should price their devices in the neighborhood of Apple’s carrier-free devices like the iPod touch (Z10). The problem Blackberry is having in America is the monopoly Apple has with the carriers like Verizon. If they release affordable devices that make contracting a second thought then Blackberry will succeed. They should make themselves rich, and not be dependent, or at the mercy of another company.

  • Jarmeling

    I can only hope and trust that BlackBerry is doing and will do what it takes to survive and prosper. My very first smartphone was a BlackBerry and I’ve never owned anything else…..I’d like to keep it that way.

  • Terry Quaid

    IMO yes, they should go private.

    The stock market and especially day trading does absolutely nothing positive for a company like BlackBerry; or many companies for that matter. Its likely that a majority of the bad sentiment these days is related sour grapes on loosing in stocks or the spin doctors trying to push the stock up and down so the day traders have something to trade.

    I put a big Canadian YES on this one.

  • http://about.me/kylemcinnes Kyle McInnes

    Interesting that 2 weeks after publishing this editorial, Reuters puts up a big exclusive saying they’re considering going private. http://uk.reuters.com/article/2013/08/09/us-blackberry-private-idUKBRE97805C20130809

  • jsammon

    It was only a matter of time that the R&D department started feeling the hit. The operational staff was hit the hardest while the upper management still enjoy all the perks such as private jets and 24 hour security. The security is probably just as a precautionary measure for disgruntled ex employees.