HI-P

HI-P: BlackBerry announced that it has signed a letter of intent with a consortium led by Fairfax Financial Holdings Ltd. to take the smartphone maker private in a deal worth $9 per share. The deal with Fairfax would total about $4.7b in value, as the consortium would acquire all the BlackBerry shares that Fairfax does not own for $9 per share. Fairfax currently owns about 10% of the company’s shares. Key customer Blackberry plunged 17% last Friday after the company issued a profit warning and slashed 30% of its workforce (4,500). Sales for 2Q to Aug’13 will come in at only US$1.6b, about half that of consensus expectations and will be writing down as much as US$960m in inventories. The inventory write-down was mainly for Z10 touch screen devices which the company had designated as its flagship model to compete with the iPhone. Net loss of the quarter is estimated to be 51c a share, way below expectations of 16c a share. On the other hand, Hi-P’s other major customer Apple is expected to post its best ever debut of their new iPhone models (6+m versus expectations of 5+m), notwithstanding that it was a disappointment when announced 2 weeks ago due to its high price point.