TORONTO - BlackBerry Ltd., the struggling Canadian smartphone maker, is considering putting itself up for sale after the lackluster debut of the BlackBerry 10 lineup dimmed its prospects as an independent company.
A special board committee will consider ways to enhance BlackBerry's value and scale, including joint ventures, partnerships or a sale of the company, according to a statement Monday. JPMorgan Chase will serve as its financial adviser.
The announcement builds on a move last year when BlackBerry hired JPMorgan and RBC Capital Markets to advise the company on strategic alternatives. At the time, Chief Executive Officer Thorsten Heins said a sale wasn't the "main direction" he was considering. The company's outlook has worsened since then, with the revamped BlackBerry 10 - the linchpin of a turnaround strategy - meeting scant demand.
"What BlackBerry is doing is the appropriate course of action," said Charlie Wolf, an analyst with Needham & Co. in New York, who has the equivalent of a sell rating on the stock. The likelihood of a sale is at least 50 percent, he said. "The other options - much less likely."
Heins will join fellow board members Timothy Dattels, Barbara Stymiest, Richard Lynch and Bert Nordberg on the new committee. Fairfax Financial CEO Prem Watsa, whose firm is BlackBerry's largest shareholder, will step down from the board to avoid conflicts that might arise from the discussions.
"Given the importance and strength of our technology, and the evolving industry and competitive landscape, we believe that now is the right time to explore strategic alternatives," Dattels, a TPG Capital executive who will serve as the committee's chairman, said in the statement.
The company's days as a publicly held business may be numbered, said BlackBerry investor Brian Huen.
"I think they're going to try to sell the company or take it private," said Huen, a managing partner with Red Sky Capital Management Ltd. in Toronto. His firm manages $214 million in assets, including shares of BlackBerry.
Heins and the board are coming around to the idea that going private would give them the leeway to fix problems out of the public view, Reuters reported, citing unidentified sources. Prior to Aug. 9, the stock had tumbled 22 percent this year.
Canada Pension Plan Investment Board CEO Mark Wiseman said last week he would consider an investment in BlackBerry if the smartphone maker decided to go private.
"It's safe to say that any large deal in Canada or elsewhere is something that we would make sure we took a hard look at," Wiseman said in an interview. "You could say that about that asset."
Linda Sims, a spokeswoman for Canada Pension, which held 4.6 million BlackBerry shares at the end of March, declined to comment further today.
Before Heins became CEO in January 2012, the company held talks with private-equity firm Silver Lake Management about possibly going private, a person familiar with the discussions told Bloomberg News last year.
The talks were preliminary and the two sides weren't able to agree on a potential valuation, the person said. Silver Lake, based in Menlo Park, Calif., has had no meetings with BlackBerry in the past year, a person with knowledge of the discussions said last week.