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The once-iconic BlackBerry handsets may be headed for the dustbin of history, but the company retains substantial economic value. Viewed solely as a standalone network company, the potential bidders for the company become both interesting and scarce.
Scotia Capital analyst Gus Papageorgiou calculates that based on patents and cash alone, BlackBerry Inc. is worth $10.16 per share. Even if we accept that the company's sub-three per cent global market share in handsets makes the devices business almost worthless, BlackBerry's secure, proprietary data network is worth a lot to the right buyer.
Credit Suisse analyst Kulbinder Garcha estimates that the network division is worth about $3.5 billion (U.S.). This figure is close to the revenue generated by BlackBerry's network services business in fiscal year 2013 ($3.9-billion).
Mr. Papageorgiou believes that revenue from the network operations can expand significantly from this point. He notes that BlackBerry's equipment would allow for mobile software updates in the global automotive business, replacing the existing time- and labour-intensive systems.
In the health care sector, Mr. Papageorgiou thinks BlackBerry can provide secure mobile connections between monitoring devices and professionals.
Mr. Garcha lists Amazon.com Inc., Facebook Inc., Microsoft Corp., Huawei or private equity as the most logical buyers of BlackBerry. (At first glance, I actually can't see the Canadian government approving a Huawei bid on software security concerns.)
Nomura analyst Stuart Jeffrey is more pessimistic, writing "we struggle to see who might buy BlackBerry given the ongoing turnaround challenges." Interestingly, Mr. Jeffrey speculates that the lack of interested buyers to date may have resulted from BlackBerry's unwillingness to allow potential buyers access to its R&D labs. Now that the search for a buyer is official, "a more open approach may improve visibility for potential bidders."
The potential for industrial expansion into automotive and health care business increases the chances of interest from industrial heavyweights like General Electric or General Motors.
BlackBerry management appears to have thrown in the towel on the current business strategy but investors, and Canadians generally, should rest assured that the company is still extremely capable of creating value and profits, no matter what happens from here.
Scott Barlow is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here to read more of his Insights, and follow Scott on Twitter at @SBarlow_ROB.
Scott Barlow