Will John Chen Really Sell BlackBerry Ltd.?

Could BlackBerry Ltd. (TSX:BB)(Nasdaq:BBRY) be sold before the turnaround expert finishes the job?

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The Motley Fool

BlackBerry Ltd. (TSX: BB)(NASDAQ: BBRY) must be the hottest watercooler topic on the street these days. With every hint of good news, confirmed or not, the company’s loyal supporters seem to gobble up the stock. You can really feel the excitement building around the name — can’t you?

One thing is for certain: The traders are having a field day with all the big headlines bouncing around the BlackBerry blogs and financial websites. Even the mainstream writers can’t resist the temptation to throw in their 11 cents’ worth. Wouldn’t it be great if BlackBerry earned 11 cents in a quarter instead of losing $11 million?

Earnings? Ah, forget about all that stuff. It’s not as interesting as the gossip.

So, the latest rumour is that Lenovo Group is going to buy BlackBerry. Most people say it will never happen due to the Canadian government’s  position on the sale of strategically critical Canadian companies. Lenovo is a Chinese company, and we all know what that means. Right? I’ll get to that in a moment.

Pundits are trying hard to find an angle that could make sense. One theory is that Lenovo could clear the regulatory barriers by simply acquiring the handset business. Why they would want to do that makes no sense to me but, hey, that’s how you justify the headlines.

All kidding aside, let’s see if there is any reason John Chen would want to sell the company right now.

Chen is a turnaround expert. He lives and breathes the challenge and it seems unlikely to me that he would let BlackBerry go before proving to the world that he can make the company a profitable niche player in the mobile market. Chen has already made some progress, but guys like this want to go out standing on top of the mountain, not while they are they hanging out at base camp. The only reason he would consider unloading the company now is if he didn’t believe it could survive.

Hmmm, now there’s an angle!

Some of BlackBerry’s largest investors have been known to lean on the CEOs of the companies they own and that could be a reason for Chen to throw a line in the water and see if there is any interest. Primecap Management and Fairfax Financial Holdings Ltd. own nearly 20% of the stock between them and it would make sense that they might be interested in offloading the position to move the funds into something else that offers more upside potential, especially given the recent pullback in the markets.

It’s a good thing for Chen that Dan Loeb bailed out last year. Hey, wait a minute, maybe Loeb sold his 10 million shares because Chen actually wants to rebuild the company into a strong, long-term competitor rather than fix up BlackBerry enough to dump it for a quick profit. Wow, there’s another angle!

Chen is originally from Hong Kong. Maybe he has friends at Lenovo who are going to help out their old buddy by making the rumoured bid of $15 a share to scare a big Canadian pension fund into coughing up a lot more. Yeah, you’re right. The theories are getting a bit out of hand now — even for a writer.

OK, back to the reality of the company being sold to the Chinese. If the Canadian government even hints that it would remotely consider the possibility of letting a Chinese company acquire BlackBerry, President Obama would be on the direct line to Prime Minister Stephen Harper so fast that the latter wouldn’t even have time to take the first sip of his American-owned morning Timmy’s. Let’s be realistic here: The Americans would be the only possible foreign buyers of BlackBerry.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Walker has no position in any stocks mentioned.

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