BlackBerry co-founder cuts stake as company shifts to software and services

Mike Lazaridis, one of BlackBerry's founders, has cut his stake in the struggling company from 5.7% at the end of 2012 to 4.99% as its woes continued.

A holding company that Lazaridis controls took advantage of a jump in the company's share price – despite it reporting a quarterly loss of $4.4bn and a 56% slump in revenues – to sell 3.4m shares, realising $26.45m. But there might be almost no profit in the move, as he had increased his holding by 3.1m shares in 2012 – and during that year the price of BlackBerry shares was almost always higher than the recent sale price.

Lazaridis's move, noted in a filing with the US Securities and Exchange Commission (SEC), comes after he failed to gather finance for a buyout of the company during the summer as it looked as though it was going to be sold for $4.9bn to a consortium led by Fairfax Holdings, a Canadian private equity group.

Lazaridis, 52, had increased his holding at the end of 2012 by 3.1m shares, apparently in expectation that the release of the new BB10 software in January would boost the company back towards the success it had enjoyed between 2007 and 2010. But his former co-chief executive Jim Balsillie, who with Lazaridis piloted the company towards its global success, sold all of his 26.8m shareholding – 5.1% of the shares – by the end of 2012.

That could mean that Lazaridis has taken a loss on the 3.1m shares bought in 2012 unless he bought them in a narrow window between 19 and 26 September, when the price was below $7.

Handset exit

Last week BlackBerry announced that it was effectively giving up making handsets as sales of its new BB10 models disappointed for the third quarter in a row, posting a $4.4bn quarterly net loss on revenues that had plunged 56% to $1.2bn. The company is likely to have dropped out of the world's ten largest suppliers of smartphones for the Christmas quarter.

Yet investors have indicated that they see promise in the plans by the new BlackBerry chief executive, John Chen, to turn it into an enterprise software company handing off handset design responsibility to Foxconn, the Taiwanese manufacturing company that also assembles phones and tablets for Apple.

For Foxconn the five-year deal, announced by Chen on Friday, will give it the chance to design BB10 handsets aimed at markets in southeast Asia – the third-largest business segment by revenue for BlackBerry after the Europe, Mideast-Africa and North American segments.

Foxconn, however, will also be taking on the "inventory risk" – the problem of being left with handsets that customers don't want and which it cannot sell. BlackBerry has successively written down $934m and $1.6bn on unsold inventory of handsets and other inventory, mostly of BB10 handsets.

• Where did the BlackBerry Z10 come in 2013's smartphone smackdown video?Powered by article was written by Charles Arthur, for on Monday 30th December 2013 11.07 Europe/London © Guardian News and Media Limited 2010


image: © Sophie Schieli

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