Suitors looking to break up BlackBerry for parts

Steven Loeb · September 14, 2013 · Short URL:

Rather than buy the company outright, potential buyers more interested in buying OS and patents

(Updated to reflect comment from BlackBerry)

We may not have BlackBerry to kick around for much longer.

The one-time smartphone king, which has fallen on such hard times, and become such a punching bag in recent years, that it is now trying to sell itself in a bid to go private. If the company succeeds in the sale, though, it may cease to exist at all.

Some of the parties interested in buying BlackBerry are seeking to split the company up into parts; rather than buy BlackBerry outright, its suitors seem more interested in only certain aspects of the company, most notably as its operating system and the patents around its keyboard, according to a report from Reuters late Friday.

Among those who are speculated to have interest in purchasing BlackBerry are Canada Pension Plan Investment Board, Bain Capital, and Chinese smartphone and computer maker Lenovo Group.

BlackBerry's marketshare has shrunk so much over the last few years that it simply is not able to compete against the manufactuering giants, including Apple, Google and, increasingly, Microsoft, anymore. So the company's individual parts might be worth more than the company as a whole. 

According to what analysts told Reuters, its messaging system could be worth between $3 billion and $4.5 billion, while its patents could be worth between $2 billion and $3 billion. There is also another $3.1 billion in cash and investments.

The company itself is only valued as $5.4 billion.

"As previously mentioned, we cannot comment on any speculation surrounding our August 12th announcement where BlackBerry announced that the Company's Board of Directors formed a Special Committee to explore strategic alternatives. These alternatives could include, among others, possible joint ventures, strategic partnerships or alliances, a sale of the Company or other possible transactions," Lisette Kwong Senior Manager, Corporate Communications at BlackBerry, told VatorNews.

"BlackBerry has not set a definitive timetable for completing its exploration of strategic alternatives, and there can be no assurance that the process will result in any transaction."

Losing to Windows

In the second quarter of 2013, of the top four major smartphone operating systems, BlackBerry was the only one to actually ship less smartphones this quarter than a year ago. It dropped to 6.8 million from 7.7 million, a decrease of 11.7%. Meanwhile, it also lost nearly half of its market share, going from 4.9% to $2.9%. 

BlackBerry has also been seeing disappointing sales of its two newest devices: the Z10 and Q10

The company sold a total of 2.7 million BB 10 OS handsets in the June quarter when many had predicted BlackBerry would sell at a good three million Z10 devices alone. But that 2.7 million figure includes both Z10 and Q10 sales. Altogether, BlackBerry’s BB 10 devices made up just 40% of its total handset sales, which means most of its sales were cheaper, older devices.

Meanwhile, Windows saw a huge increase in shipments: going from 4.9 million to 8.7 million, an increase of 77.6%. That, combined with its purchase of Nokia for $7.17 billion last week has solidified its hold on the number three spot, and permently relegating BlackBerry to also-ran status.

The splitting up of BlackBerry is, of course, not a done deal and is still not the only possible outcome.

Fairfax Financial Holdings, which is the biggest BlackBerry shareholder, has also reportedly been approaching some investment firms in Canada about forging a deal to take the company private.

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