The news that foundering smartphone maker BlackBerry is going to be taken private by one of its largest shareholders has made big waves across the technology and business communities alike. If you're struggling to get up to speed on the news, here's a quick primer to help you along:
Why go private now?
Most readers probably know that BlackBerry formerly Research In Motion has been taking a beating in the smartphone market for years now. The company's efforts at revitalization, which included the rebranding and the launch of BB 10 OS, have failed to undo the huge market share losses incurred by the success of the iPhone and numerous Android-based competitors. While it's been looking bad for a while, the pace of unsettling news coming out of the Canadian company has ratcheted up sharply of late. BlackBerry's announcement last week that it expected to post a billion-dollar loss for the last fiscal quarter coupled with the simultaneous news that it would be laying off 4,500 workers, or 40% of its total workforce completed the picture of a business circling the drain.
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Who's Fairfax Financial?
Fairfax Financial is Prem Watsa, an Indian-born investor who frequently gets referred to as the Warren Buffet of Canada. He's been a major BlackBerry shareholder for some time owning upwards of 10% of the firm's shares, and sat on the company's board until very recently. (A move that prompted immediate speculation that he intended to buy the company.)
Does this mean the company's going to close down completely?
It seems unlikely that will happen in the short-term, and analyst Jack Gold of J. Gold Associates says that the buyout makes it less likely that BlackBerry will fold, not more likely.
"[G]iven six to 12 months of 'under the cover' ability to do what is needed, it could be a much more attractive acquisition target at the very least. And it would at least allow management to concentrate on the important aspects of restructuring, rather than spending massive amounts of time with the investment community," says Gold.
So what happens now?
To be honest, nobody really knows for sure, but there's no shortage of speculation.
Gartner principal research analyst Bill Menezes says that BlackBerry could see wholesale changes, with entire divisions being spun off, sold or otherwise moved around.
"What we're seeing is really just the first part of a process that's going to determine which parts of BlackBerry will be left standing," he says.
What does this mean for business customers?
Overall, probably not that much. Menezes says that "there's every reason to think that [BlackBerry's services] business will continue for some time." Services and the company's patent portfolio are still profitable, at least for the moment.
"People's BES servers are going to continue to work the question is how long are they going to be supported and sustained," says Menezes.
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This story, "FAQ: What does BlackBerry going private mean?" was originally published by NetworkWorld.