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CKA Uber
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PostPosted: Tue Mar 25, 2014 12:56 pm

BlackBerry tried to sell itself to Chinese computer giant Lenovo last year. But CBC News has confirmed the company got a firm no when it approached the federal government to find out if the bid would be approved.

At the time, the company was told that either Chinese or Russian investment would be met with stiff opposition. So it abandoned the sale.

But it turned out there was something Ottawa could do to help the beleaguered company. BlackBerry received an early Christmas present from the federal government, courtesy of a remission order – a $696 million US ($767 million Cdn) early payment of part of its tax refund.

The infusion was a boon to the company, which at the time was burning through its cash reserves and attracting investors who were betting big money it would fail.

Last year was one of crisis for the company, which saw the launch of its much-anticipated Z10 and Q10 phones. But that launch was a flop, forcing the company to take huge writedowns on unsold products and report losses that saw it burn through its previously flush cash reserves.

"It was snowballing pretty out of control," says Peter Misek, a BlackBerry analyst and managing director with Jefferies. "Within the company, within Waterloo, there was devastation and there was glee amongst short sellers.

"It was kind of sad because thousands of people stood to lose their jobs."

In August of last year, the company put itself up for sale. It was at that time Lenovo, among others, started kicking the tires, inquiring about a potential sale. When BlackBerry asked the federal government whether the deal would be approved, Ottawa said no and the possible sale was quickly and quietly killed.

By Sept. 20, when the company announced it would lay off 40 per cent of its staff, its cash reserves had plunged to $2.6 billion US, $500 million lower than they were just three months earlier.

At that rate, the company would have been out of money in about a year, as the market was rapidly losing confidence and consumers seemed hesitant to buy new phones from a company seemingly on the way out.

By the end of the year, however, BlackBerry's cash reserves had rebounded, and were sitting at $3.2 billion US.

That was in large part due to the backing of one investor – Prem Watsa of Fairfax Financial, who organized a $1-billion US financing effort and brought turnaround expert John Chen on as the company's new CEO.

But another huge chunk of cash – $696 million US – came from an early payment of its spring tax refund by both the federal and Ontario governments last November, in what's called a remission order.

According to BlackBerry's publicly available management discussion and analysis filing, during the third quarter the company "took steps to accelerate the receipt of a portion of the tax refund to which it is entitled".

It arranged with both levels of government to receive the majority of its tax refund ahead of time, and receive the remainder, which BlackBerry estimates at $170 million US ($187 million Cdn), later this year.

According to Misek, that extra payment had a massive impact, saying "it might have saved the company – we might look back in a year or two, whatever BlackBerry becomes, and say that was the day they saved the company". ... nance.html

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PostPosted: Wed Mar 26, 2014 5:40 am

So the Harperites let the Chinese take over natural resources but have a problem with Blackberry?

CKA Super Elite
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PostPosted: Wed Mar 26, 2014 6:20 am

Honestly, if push comes to shove with China over natural resources, the infrastructure and land can be seized. You can't really do the same thing with security programming.

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