By Kevin Kelleher, contributor
FORTUNE -- There has been a lot of discussion of what went wrong with BlackBerry. And there is no shortage of explanations: The company grew complacent with its early market share. It didn't listen to consumers but tried to show them what they wanted. It never succeeded in courting developers. It neglected touchscreens too long. It never leveraged its messenging service into new businesses. Its leaders bickered over how to fix the company. And so on.
Right now, the bigger question facing the company is what could go wrong from here. In the past few weeks, the writing on the wall has become clearer. Losses are mounting so quickly the company burned though $1 a share in cash last quarter. The company said it would cut a third of its employees and take an inventory writedown as large as $960 million. On Wednesday Blackberry (BBRY) said it was losing its international market share. Now, Fairfax Financial, its largest investor, is looking to arrange a buyout to take the company private.
A related question, of course, is what could go right, and the answer here seems to be: not much. A merger with a deep-pocketed tech giant? Unlikely. A Dell-like (DELL) turnaround as a private company, emerging in two years with more competitive phones? Odds are strongly against it. A breakup into patents, messaging service, and devices? Maybe, but that's hardly a happy ending.
So much of the analysis of BlackBerry's future has accented the negative. As much as the bulls would like to see a comeback, there remain several factors that are working against one, and they are pretty formidable.
The most immediate threat is that the financing of the buyout may fall through. Fairfax needs lenders or co-investors to finance the proposed deal. The company has been exploring options for the past year, and if a private-equity firm wanted in, they already had their chance. BlackBerry has been a tech luminary for Canada, so Canadian pension funds may want to step up, but fiduciary responsibilities could also prompt some of them to balk from backing this deal.
That reluctance comes in spite of BlackBerry's bargain-basement valuation. The stock is priced at a fifth of the company's revenue of the past 12 months, according to Bloomberg. By contrast, Microsoft (MSFT) paid 0.4 times Nokia's (NOK) trailing 12-month revenue from devices and services. Already there are signs that Fairfax may lower its bid to $7 a share from the original $9 a share figure.
Fairfax has a nice piece of insurance in case the deal falls through. BlackBerry agreed to pay Fairfax a $157 million breakup fee, a high amount by historical standards. That could leave Fairfax with a handsome payout for only a few months of looking for other backers. And would deter others from proposing rival deals in the meantime.
Should a deal fall through, Blackbery's value may fall to $5 a share, Bernstein Research estimates. The company's patents, valued at around $2.8 billion, may not sell as high as they would have been a year or so ago, when Google (GOOG), Microsoft, and others were paying rich premiums for them. Now these companies have robust portfolios of patents, and if they want to add to them, they're unlikely to overpay.
In the meantime, the longer things remain uncertain, the more customers and partners will want to back away from the company. This is already happening with manufacturing partner Jabil Circuit (JBL), and T-Mobile (TMUS). And clients like Morgan Stanley (MS) are delaying upgrades to new BlackBerry devices as well. If such trends continue, it would hurt revenue even more and make a turnaround that much less likely.
The constant stream of bad news has already dampened BlackBerry's consumer brand in an era where mobile devices have become as much about branding as anything. The decline in BlackBerry's average selling price suggests the phones that are selling are older models, not the Z10 and Q10 that the company developed for years. While those new phones have their fans, they've failed to resonate with a broad segment of the consumer market.
That's too bad, because BlackBerry's best chances were the Z10 and Q10. They might have sold better in a less competitive market than the smartphone one is right now, but Blackberry's struggles tarnished their image.
In retrospect, the Z10 and Q10 may be seen as BlackBerry's best chance for a sure turnaround. For now, however, there are more things going against this company than there are in its favor.
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