BlackBerry sale might not include smartphones
Analysts see considerable value in BlackBerry's secure network, BB 10 operating system and patents, but little in its smartphone business
Computerworld - Potential bidders for BlackBerry are only interested in parts of the business, concluding that the firm's smartphones, such as the recent Q10 and Z10, have little or no value, reports say.
Bidders from private equity firms are interested mostly in the BB 10 operating system that powers the new BlackBerry smartphones, along with selected patents related to keyboards, unnamed sources familiar with the potential sale told news agency Reuters.
BlackBerry on Aug. 12 formed a special committee to look into a possible sale of the company, "other transactions" and the creation of joint ventures and alliances.
BlackBerry declined comment on the Reuters report.
Fairfax Financial Holdings, which owns 10% of BlackBerry, did not respond when contacted by Computerworld. Reuters and others reported that Fairfax has approached several large Canadian investment funds about taking BlackBerry private. Fairfax is based in Toronto, near BlackBerry's Waterloo, Ont. headquarters.
The lack of interest in buying all of publicly-traded BlackBerry, valued at about $5.4 billion recently, primarily stems from the challenges facing the company in a very competitive smartphone environment. BlackBerry must compete against top selling Apple and Android-based devices as well as smartphones running Microsoft's Windows Phone, which recently passed BlackBerry to hold the third place ranking in smartphone market share, according to Gartner and IDG.
For all of 2013, Android is expected to grab a 75% share of the global smartphone market, versus 17% for Apple's iOS-based phones, 3.9% for Windows Phone and 2.7% for BlackBerry, IDC said.
Several technology analysts said they were somewhat surprised by the apparent lack of interest in all of BlackBerry, arguing that just five weeks after BlackBerry formed its special committee, it's too early to give up hope for a comprehensive sale.
BlackBerry's wireless email devices created the foundations for the smartphone revolution in 1999, seven years before the first iPhone launched in 2007. But BlackBerry's market share has fallen from $84 billion in 2008 to $5 billion today. In addition, sales of the new Q10 and Z10 haven't met expectations, analysts noted.
"I'm surprised there are not takers for BlackBerry," said Ezra Gottheil, an analyst at Technology Business Research.
"The patents and platform are worth quite a bit, but I also think the device business could be run at a profit," Gottheil said. "BlackBerry tried to follow Apple and then Android into the consumer space, but I think there is a place for a business device, one that is more secure, easier to use for email and has lower network costs."
Carolina Milanesi, a Gartner analyst, said the "best fit for a buyer should come from the enterprise world." Such a vendor would be interested in BlackBerry's services and hardware businesses, and could capitalize on the BlackBerry secure network as well, she said.
"I think the lack of news [about a buyer] is not all about BlackBerry not being attractive, but about the complexity of today's market and what it takes to be competitive," Milanesi added.
Analysts have said the BlackBerry's services business, which includes the secure network, could be worth up to $4.5 billion alone, while a number of BlackBerry-related patents could be worth up to $3 billion. In addition, BlackBerry has $3 billion in cash and investments.
All those elements combined could make the full company worth up to $10.5 billion, well above BlackBerry's $5.4 billion market value. Financial analysts have said the smartphones have little value to any buyer, and that shutting down that operation could cost $2 billion.
BlackBerry's move to create the special committee marked a formalization of an informal process started more than two years ago to take the company private, analysts noted.
"BlackBerry's best bet is to find a way to go private to give them the slack they need out of the public spotlight to do what needs to be done to restructure the company," said Jack Gold, an analyst at J. Gold Associates.
BlackBerry is essentially made up of its devices, services and BlackBerry Messenger community components, but splitting up the company would "likely devalue the whole," Gold said. "The sum of the parts really is worth more than the individual pieces broken up, in my opinion."
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed . His email address is firstname.lastname@example.org.
- How a private Dell works with customers, and sees its rivals
- Update: SanDisk agrees to pay $1.1 billion flash storage maker Fusion-io
- CompTIA now offers its research without charge
- Microsoft's new CEO and his first-100-days plan
- Personal history may thrust new Microsoft CEO into visa debate
- As Dell cuts, Apple adds jobs in Austin
- Dell cuts 'small percentage' of workforce
- Lenovo's Motorola, IBM server buys will likely get strict U.S. security review
- Welcome to the era of radical innovation
- China passes Japan to become world's 2nd largest IT market
Read more about Mobile/Wireless in Computerworld's Mobile/Wireless Topic Center.
- Mission Critical: Managing Mobile Applications & Content Smartphones, tablets and other mobile devices have become embedded in enterprise processes, thanks to the consumerization of IT and a new generation of...
- Securing Mobility, From Device to Network At one time, the process of managing and securing mobile devices and applications was fairly straightforward. Most organizations worried about one application (email)...
- Planning for Mobile Success Many organizations are seeing clear and quantifiable benefits from the deployment of mobile technologies that provide access to data and applications any time,...
- The Challenges and Opportunities of Mobile Application Development Nearly all business users now demand mobile devices--their own or company-owned--along with anywhere access to corporate applications and data. What turns mobile devices...
- On Demand: Mastering the Art of Mobile Content Management Mobile device usage in the enterprise has skyrocketed, and it continues to escalate. IT must answer to users who demand access to their...
- Technology for Everyone A Kansas school district modernizes teaching and learning and paves the way to a one-to-one program with a comprehensive upgrade of its wireless... All Mobile/Wireless White Papers | Webcasts