While BlackBerry has found a buyer through the the $4.7 billion offer by Fairfax Financial Holdings, the action to take the company private does not necessarily resolve the smartphone maker’s problems, according to commentary by Prof. Stephen Lubben in yesterday's New York Times DealBook blog. There is no guarantee that Fairfax will close the deal, according to Lubben, and while its letter of intent includes a go-shop provision, it is unclear whether a rival suitor will surface. BlackBerry announced on Friday that it expected to report a quarterly loss of nearly $1 billion and planned to lay off about 4,500 people, or 40 percent of its workforce. The challenge BlackBerry faces is reducing its operations as its customer base shrinks. Companies that fail to adjust to current reality can quickly find themselves insolvent as they try to pay for the infrastructure of an older, grander operation with the revenue of a newly smaller business. The only way BlackBerry can avoid bankruptcy, according to Lubben, is to shrink its costs along with its size.
