As Blackberry gets closer to its ‘Palm’ moment with close to 10,000 in layoffs and a billion dollar write down it needs to find a foreign buyer fast. But one piece of legislation may get in its way.

Thorsten Heins BlackBerry 10 0 Blackberry is the Canadian governments to save

Rumors of layoffs at Blackberry have held true: the company announced Friday that 4,500 of its staff — approximately 40 percent of its workforce — is being let go. The reason? An incoming writedown (monetary loss) that’s expected to be between $953 million and $1 billion.

This loss is largely because of unsold inventory of its Z10 smartphone — the same smartphone that had a return rate of close to 20 percent. In a statement announcing the incoming writedown the company said it will be taxing a, “non-cash, pre-tax charge against inventory and supply commitments in the second quarter…which is primarily attributable to BlackBerry Z10 devices.”

News of this writedown sent Blackberry’s shares plummeting on the NASDAQ and on the Toronto exchange. By the time the tumbling slowed, Blackberry’s shares had dropped by 17 percent in total coming to rest at $8.73 on the NASDAQ and $9.08 on the TSE.

How much is there left to the company? It’s stuck with a glut of unsold inventory, and between this year and last has laid off nearly 10,000 employees from its once stoic ranks.

Some have said its having its “Palm” moment. In 2009, Palm took to the stage at CES to announce what it hoped to be its saving grace: the Palm Pre and WebOS. Palm was being slaughtered in the market by RIM’s (as it was known then) Blackberries, the iPhone, and an increasing wave of high-quality Android devices — new entrants to the market at the time.

While the buzz around Palm’s CES event was positive, but the devices turned out to be duds. Though technically impressive consumers voted with their wallets, instead opting for the new iPhone 3s or Droid. By the next year, Palm was sold for intellectual property and patents to Hewlett Packard. HP tried releasing a webOS powered tablet, but that venture resulted in a glut of unsold inventory and firesale prices.

Some analysts have clued in to Blackberry’s predicament.

“It reminds me very much of Palm,” said Keith Lam, of Red Sky Capital Management Ltd. in Toronto, to Bloomberg. “HP tried to catch a knife buying Palm and it didn’t work out. So I’m not sure why anybody would step in here. These numbers are extremely bad.”

The Battle of Waterloo, fought in Ottawa

Blackberry has long sought a buyer to spirit it away as a private company. While there are stark similarities in the tales of Blackberry and Palm, there are also stark contrasts: Blackberry has a handful of products where demand is constant, if not growing, and has a treasure chest of patents. Blackberry Enterprise Server, for instance, is growing in popularity with lucrative enterprise clients. The company’s patent portfolio is said to be worth between $2 to $5 billion alone. Despite its great decline from Wall Street punishing the company for not selling handsets, there is still some inherent value to the company.

Which is what makes this comment from a Toronto-based analyst interesting.

“It appears the only option BlackBerry has is to ultimately sell itself,” said Neeraj Monga, an analyst at Veritas Investment Research, to Bloomberg. “But it seems nobody’s stepping up to the plate.”

Nobody is stepping up to the plate because the Investment Canada Act is getting in the way.

Foreign takeovers of a Canadian firm are regulated by the Investment Canada Act. If the buyer is a from a WTO member country a review is triggered when the target company’s assets are over $1-billion (Canadian, as of Jan 1 2014). Reviews are also triggered if the government deems the company is of a “strategic interest” to Canada. Should the review prove the purchase will be a “net benefit” to Canada, it is given the green light. If not, the government blocks the sale.

Ottawa gave a potential American buyer buyer of Vancouver-based military contractor MacDonald Dettwiler and Associates (maker of the Canada Arm) the red light, yet gave the green light to Calgary-based energy company Nexen to sell part of itself to China’s state-owned China National Offshore Oil Corporation last December.

Given the mixed messages from Ottawa on what’s acceptable and what’s not acceptable for a foreign company to take over, it’s anyone’s guess as to what they will say when approached with the Blackberry question.

Not surprisingly, as per Canada’s lobbying register, Blackberry has been hard at work lobbying Industry Canada on the topic of the Investment Canada Act. Canadian disclosure laws for lobbying aren’t as comprehensive as their American counterparts, but the Investment Canada Act is the first policy that appears on the list.

For good reason too: the capital to purchase Blackberry might not exist in Canada. Without a Nokia style takeover, there isn’t much left for the company. Everything is riding on ensuring that the Investment Canada Act works out in its favor.