BlackBerry shares rise on possible Cerberus bidding interest

Reuters

TORONTO/NEW YORK, Oct 2 (Reuters) - The possibility of asecond offer for BlackBerry Ltd reversed aslide in its stock price on Wednesday after the strugglingsmartphone maker said it expected to record $400 million inpre-tax charges related to cuts announced last month.

A person familiar with the matter told Reuters that privateequity group Cerberus Capital Management LP was considering anoffer for BlackBerry, which put itself on the block in Augustafter bleeding market share to other smartphone makers.

The Wall Street Journal earlier named Cerberus as one of twofirms that specialize in distressed investing that might belooking at BlackBerry. It did not name the second firm.

The Journal quoted one of its sources as saying thatCerberus aims to sign a confidentiality agreement withBlackBerry that would give it access to private financialinformation, but that it might in the end not bid.

Cerberus declined to comment.

BlackBerry shares were up about 1 percent, reversing a 5percent fall earlier in the session.

The stock, at about $8 by mid afternoon, remained well belowa tentative $9 a share offer from a consortium led by Torontoinsurer Fairfax Financial Holdings Inc, which wants totake the smartphone maker private.

BlackBerry, which increasingly competes unsuccessfully withApple Inc's iPhones and devices running Google Inc's Android operating system, accepted the tentative $4.7billion Fairfax offer last month.

Fairfax and BlackBerry declined to comment.

"We do not intend to disclose further developments with therespect to the process until we approve a specific transactionor otherwise conclude the review of strategic alternatives," aBlackBerry spokesman said.

Waterloo, Ontario-based BlackBerry, previously known asResearch In Motion, was founded by Mike Lazaridis, whose littlewireless devices offered the first easy way for lawyers,executives and politicians to access email away from the office.

Lazaridis left the company last year but remains a majorshareholder. The Journal said he is also assessing whether tobid. Lazaridis could not be immediately reached for comment.

In the latest in a string of underwhelming results,BlackBerry last week reported a wide loss and slumping sales. Itwill cut 40 percent of its workforce to halve operatingexpenses.

When BlackBerry reported these results, it said it wouldupdate its 2013 outlook in a regulatory filing, and the likely$400 million in expected charges formed part of the latestfiling, released late on Tuesday.

It expects to take those charges - for severance, "networksimplification costs" and other expenses - over the remainder ofthis fiscal year, which ends March 1, 2014, and in the firstquarter of fiscal 2015. It had previously said it would take a$100 million charge for the current fiscal year.

In a blow to BlackBerry's hopes that it could succeed as aniche supplier of secure email services, the filing also saidcorporate and government customers have been slow to adoptBlackBerry's new servers, which manage new BlackBerry devices aswell as iPhones and Android devices.

BlackBerry said it reduced the price of its touchscreen Z10device during the quarter and plans further incentives to boostsales. It kept some BlackBerry 10 sales to distributors off thebooks in the quarter due to uncertainty over their eventual saleprice and the rate at which they may be returned.

BlackBerry also said it intends to sell $122 million ofredundant property, plant and equipment assets as part of itscost-cutting drive.

It said its property, plant and equipment had a net bookvalue of $2.2 billion at the end of August, while it valued itsintellectual property at $3.35 billion.

The proceeds of any real estate sale may make BlackBerry amore attractive target. But buyers may simply be looking fordetailed estimates of the value of the assets.

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