Who Wants to Buy Blackberry (NASDAQ: BBRY)?

Splitting Up the Pieces

By Jon Carter
Friday, October 11th, 2013

There was speculation recently that Blackberry (NASDAQ: BBRY) would become private once again, one day reinventing itself as a new, competitive entity.

However, it appears the best option for Blackberry is to be broken up into different pieces.

blackberry pearlBlackberry had previously agreed to a $4.7 billion buyout offer from Fairfax Financial Holdings (OTC: FRFHF). Blackberry has until November 4 to find other lucrative offers, but no other bids have been on the table. Still, the deal with Fairfax is not finalized, and while the firm is working with investors to get the necessary financing, some fear the deal won't go through.

By all indications, it appears Fairfax may not be able to get the necessary funding, and the deal may be susceptible to failure. This sentiment has spread to the market, with Blackberry’s shares falling below Fairfax’s $9 share offer.

Blackberry Pie

An acquisition of Blackberry as a whole may be off the table, since there aren’t that many companies interested in buying the company.

However, buyers may be interested in certain parts of the company, which is why Blackberry needs to be carved up like a pie, so to speak.

For instance, Intel Corp. (NASDAQ: INTC) could be interested in purchasing Blackberry’s patents, while SAP (NYSE: SAP) may be willing to grab the enterprise portion of Blackberry’s business – the division responsible for the company’s smartphones.

Other companies like Samsung (KSE: 005935), Google (NASDAQ: GOOG), and Cisco (NASDAQ: CSCO) may also be willing to purchase parts of Blackberry.

What you’re seeing now is a circle of vultures flying over a dead carcass. It sounds morbid, but companies are hovering above the dying Blackberry and pinpointing the meatiest parts to pick off.

It would certainly be one of the more unusual acquisitions in tech history.

Alberta Investment Management Corp. CEO Leo de Bever called the move a “bizarre sales process,” Bloomberg reports

And it is hard to imagine Blackberry’s survival if pieces of the company are going to be sold off to the highest bidder.

Death of Blackberry

If remnants of the Blackberry phone can survive, it may be able to do well in emerging markets abroad if the company has the proper backing and support.

But selling off the most imports parts of the company will make it harder, if not impossible, for Blackberry to recover. Its smartphone division is not a big hit among investors, but its patents and corporate services division will be a larger attraction among buyers.

Also, there is word that the smartphone portion of Blackberry’s market may be shut down altogether if larger portions of the company are acquired.

Although we’re seeing little interest in the whole company, there are plenty of rumors and speculation that other companies may be willing to become buyers before the deadline – something that has driven up the stock in the past few days.

Blackberry products may be a total wash-out, but its cash value of $2.6 billion may attract potential buyers.

So how did Blackberry take such hard fall in the tech world? It simply failed to adapt to a changing market.

At a time when companies like Google, Samsung, and Apple (NASDAQ: AAPL) were focusing on entertainment-driven smartphones, Blackberry fell far behind on this trend, and by the time the company picked up on the entertainment aspect of the smartphone market, it was too late. Blackberry’s rivals came out with superior quality phones, and consumers were not impressed with Blackberry’s latest models.

Blackberry instead chose to remain confined within its corporate/business consumer base, which only ended up keeping the company insulated in a virtual bubble.

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Will Blackberry’s downfall spread to the tech world?

This is a disease specific only to Blackberry. Within the smartphone industry, however, we are seeing a peak in which newer model phones aren’t selling as well, since there are plenty of previous model and feature phones available on the market.

This is not good news for companies like Apple, but emerging markets in Asia and Africa can spell massive profits if these companies can appeal to domestic populations.

But companies like Apple and Samsung also face harsher competition from local vendors offering cheaper high-quality phones.

One of the most well established smartphone companies doing well in developed and developing markets is Samsung. Samsung is keeping Apple on its toes in Europe, and the Korean company has made surprising inroads in emerging economies like China. Through its connections with government officials and telecom companies, Samsung has been able to make its products specifically Chinese.

Apple is also looking make more headway into Chinese markets, and other companies will begin shifting attention toward the developing world .

Unfortunately for Blackberry, I just don’t see the company fitting into this emerging trend.

But perhaps components of the company will add value to buyers who want to absorb parts of the company.

Stay tuned to see who gets the meatiest parts of the carcass.

 

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