BlackBerry savior Watsa, an investor with a long view
By Andrea Hopkins and Cameron French
TORONTO (Reuters) - As soon as Prem Watsa stepped down from Blackberry's board in August, speculation that he would launch a bid for the troubled smartphone maker started to swirl. Six weeks later, the man some call Canada's Warren Buffett has delivered, beginning a rescue project he once said could take four or five years.
Just over a year ago, Watsa said BlackBerry was a "Canadian success story," a good buy and a likely turnaround story even though its market share was tumbling.
BlackBerry's fortunes have only deteriorated since then, with the latest blow coming on Friday, when Blackberry said it would cut more than a third of its workforce as it retreats from the consumer market in favor of its traditional strength serving businesses and governments.
But Watsa, chief executive of Fairfax Financial Holding Ltd, which is the top BlackBerry shareholder, is an old hand at looking wrong today and right tomorrow.
On Monday, BlackBerry said it agreed to be acquired by a consortium led by Fairfax for $4.7 billion, a move observers said could allow the company to put its house back in order out of the public eye.
Fairfax, both an insurance holding company and Watsa's investment vehicle, was on the losing end of bets against the market in the mid 2000s as Watsa waited for the U.S. mortgage industry to collapse.
The company's stock fell by 50 percent between mid-2003 and mid-2006 as Watsa's purchases of credit default swaps flattened profits, while rivals feasted on a housing-fed bull market.
But when the market began to weaken in 2007, Fairfax began notching up investment gains, pulling in billion-dollar profits in 2007 and 2008. Then with markets still reeling and other investors licking their wounds, Watsa started to plow money back into equities, bringing another strong year in 2009. Continued...