Life support for BlackBerry, but a long road to recovery awaits

Life support for BlackBerry, but a long road to recovery awaits

Away from the public markets, questions over BlackBerry’s financial stability – which must have given business customers pause for thought when renewing their mobile contracts – will be less voluble. Restructuring is often best done away from the magnifying glass of the investment community.

The biggest risk is that BlackBerry sticks to its plan to become a corporate-focused business.

The major step change in the growth of computer and mobile technology was when consumers were offered better kit at home than they used at work. Apple and Google Android both understood that, using the demand of retail customers to maintain the loyalty of corporate customers in a self-reinforcing loop.

BlackBerry appears to be trying to cut that link in the face of all the evidence. It argues that it will focus on business and government customers as if they are quite separate from the retail world, where people use their smartphones as mini-offices.

The flaccid launch of BlackBerry’s Z10 touchscreen product shows just what can happen when you divorce the consumer market from the core business. This is particularly true when, as in mobile, innovation is driven by the very same consumer market and the vital app builders who look to take advantage of the latest trends.

This is certainly not a “with one bound, the lumbering tech giant was free” moment. The announcement just hours before the Fairfax bid was made public that BlackBerry’s Messenger roll-out for Apple and Android was being delayed due to a leak shows that the business’s propensity to make a Horlicks of its own affairs remains undimmed. It should not be forgotten that the pain of the constant service breakdowns of 2011 are still fresh in many minds.

BlackBerry is a sick patient that has been given some life support. Whether Fairfax is the ultimate saviour or simply a bit of respite care is yet to be seen.

Centrica gas storage decision leaves doubts

Commiserations to Sam Laidlaw on a long, valiant, but unsuccessful fight.

“The boss of energy company Centrica is turning up the heat on the Government over Britain’s lack of storage facilities for gas,” the Daily Telegraph reported as far back as 2007. The year before, Centrica’s Rough storage facility in the North Sea – the bulk of Britain’s existing storage – had been shut down for months after a fire, exposing the fragility of our supplies.

Come 2008, Centrica embarked on plans to develop the Bains storage site in the Irish Sea. “The UK’s limited gas storage capacity means we are always exposed to price spikes on mid-winter, high-demand days,” Mr Laidlaw wrote that summer, a few months before spending £70m on the planned Caythorpe store in East Yorkshire.

Then, in early 2009, as Europe reeled from Russia’s decision to cut off gas supplies to Ukraine, causing shortages and price spikes, Centrica spent £25m buying into the Baird gas storage project in the North Sea, which would be almost the same size as Rough. “The UK is in need of more gas storage to ensure supplies for customers in the future,” Mr Laidlaw said.

The archives from 2010, 2011 and 2012 are littered with similar warnings as Centrica urged Britain to double its storage capacity from its existing 15 days’ worth, helping provide back-up as North Sea production dwindles.

“The risk,” Mr Laidlaw explained this summer, “is that if you have a situation where you are struggling for security of supply, you have to pay the highest price in the world to bring LNG [liquefied natural gas] to the UK. That could mean very significant additional costs on customer bills.”

On Monday, Centrica finally admitted defeat. It pulled the plug on the Baird and Caythorpe projects, in which it had racked up £240m of costs, having already ditched Bains last year.

The writing was on the wall ever since ministers ruled out subsidising the projects. Since Centrica made its initial investments, gas price trends have changed, leaving returns on storage projects uncertain. The company had made clear it would not proceed without a subsidy.

In rejecting subsidies, ministers argued they would cost more than they would save. It’s a fair argument – if true. But, as the Telegraph revealed, analysis commissioned by the Government itself suggested the reverse would be the case in most credible scenarios, and subsidies could actually leave consumers £1bn better off.

Ministers said the costs of subsidies were certain, while the benefits of storage were uncertain. “Gas supplies worldwide are increasing, and it is increasingly easy to import additional supplies to the UK if required,” Michael Fallon said.

Perhaps the gamble will pay off. Winters will not be exceptionally cold, Russia will not fall out with its neighbours, no more accidents will befall the decades-old Rough site and the world will deliver plentiful cargoes of cheap gas to the UK. The gas price will remain stable and the Government will be vindicated.

If not? Well, there’s at least one man who will be justified in saying “I told you so”.

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