BlackBerry shares rise on reports asset auction could come by November

TORONTO – BlackBerry shares crept up for the third consecutive day as investors responded to reports that the smartphone maker wants to launch an auction process sooner rather than later.

The Waterloo, Ont.-based company’s stock rose 32 cents to close at $11.60 on Thursday at the Toronto Stock Exchange.

BlackBerry’s list of potential buyers has whittled down over the past week as Microsoft announced plans to buy Nokia Corp.’s handset division for US$7.17 billion.

Chinese technology company Huawei also appeared uninterested after board member Chen Lifang told reporters in London that the company isn’t shopping around for acquisition targets, but instead plans to focus on its existing operations.

A report from the Wall Street Journal says BlackBerry has already narrowed the list of potential bidders, a logical next step after announcing last month that it would explore several “strategic alternatives” including its possible sale.

The Journal cited unnamed sources as saying that an auction process could be completed as early as November.

BlackBerry has kept its options open since last year when it hired two adviser firms to search for ways to shore up cash. Earlier this summer it broadened those options when it said it formed a special committee to consider strategic alternatives, including its sale.

Another option would be to take BlackBerry private, though it would need to find the support of enough investors to make that possible.

One of the first places BlackBerry could turn for partnership opportunities would be major domestic pension operators like the Canada Pension Plan Investment Board and the Ontario Municipal Employees’ Retirement System.

BlackBerry has struggled to maintain its marketshare in recent years as Apple’s iPhone and devices on the Android operating system became the most popular devices in stores.

After several delays, the company launched a new line of phones earlier this year, which included its hyped BlackBerry Z10 touchscreen and BlackBerry Q10 keypad devices. The phones have failed to catch on with consumers, and BlackBerry’s share of the smartphone market has dropped to 2.7 per cent, according to research firm IDC.

Analyst have also returned to their increasingly dismal view of the company’s prospects in recent weeks.

Canaccord Genuity analyst Michael Walkley said Thursday that his latest global survey of retailers indicates “very weak” sales of the new BlackBerry phones, and “sharply declining sales” of older BlackBerry devices.

The flagging interest has led to Walkley pulling back estimates for how many BlackBerrys are shipped to stores in the company’s fiscal 2014 financial year. He now expects 24.1 million units to be sent to retailers, which is 2.6 million fewer units than his previous estimate.

In a report, Walkley details estimates for the company’s assets at about $4.1 billion, which is less than a year ago, as the company continues to spend cash to promote its BlackBerry 10 operating system while other assets begin to lose their core value.

“Given our belief BlackBerry’s hardware business will struggle to return to profitability given increasing smartphone competition, we struggle to assign any value to the hardware business,” he wrote in a note.

“The most logical acquirer of BlackBerry would likely attempt to transition BlackBerry’s subscriber base to their own competing smartphone products or ecosystem.”

At the company’s annual meeting in July, chief executive Thorsten Heins unveiled a three-stage plan to return to profitability. It included pushing ahead with new products yet to be unveiled, opening the BlackBerry Messenger service to other phones and focusing on corporate customers.

BlackBerry is expected to unveil its first “phablet” in the coming weeks, though the company hasn’t made anything official. The device would serve as a midpoint between a smartphone and a tablet.