BlackBerry (NASDAQ:BBRY) to Accelerate Sale of Company
NEW YORK – Shares of embattled handset maker BlackBerry have been on the rise in recent days amidst rumors that the company will fast track its efforts to find a buyer. In last week’s trade share rose almost 7 percent, opening Monday at $ 10.18 and closing the week at $ 10.84. On Wednesday, a report from The Wall Street Journal cited people familiar with the company’s search for a buyer stated that the BlackBerry had narrowed its list of potential buyers and that an agreement to sell the company could be in place as soon as November.
Based on unnamed sources and there is no guarantee that any of the companies mentioned will make a play for the embattled handset maker. Furthermore, Microsoft’s (NASDAQ:MSFT) decision to acquire Nokia (NYSE:NOK) might have reduced competition for BlackBerry – Microsoft was rumored to have an interest in the company.
In their report, The Wall Street Journal named the Canada Pension Plan Investment Board and Bain Capital as potential investors. While either fight might invest in the company they are not expected to purchase the company outright – BlackBerry’s current market capitalization is in excess of $ 5 billion.
However, tech firms who are looking to expand their involvement in the smartphone wars might be consider BlackBerry for its patents and distribution. Those firms include Hewlett-Packard (NYSE:HPQ), Samsung (KS:005930), and Lenovo (HK:0992). Lenovo might be considered a frontrunner. While the company declined to comment on its interest in BlackBerry, Lenovo CEO Yang Yuanqing has publically stated his belief ‘that the PC industry and the mobile phone industry will continue to consolidate…If a target or deal is consistent with Lenovo’s strategy, we would take the opportunity.’
Lenovo acquired IBM’s (NYSE:IBM) personal computer business in 2005 for $ 1.25 billion. However, the business environment has changed since then, and a bid from Lenovo is likely to be highly scrutinized by the U.S. Government due to Lenovo’s close ties to the Chinese Government. Blackberry was once the phone of choice for government agencies and their servers could contain a treasure trove of sensitive information.
Whoever bids to take over Blackberry will face an uphill battle, the company’s share are trading well of the well off the all-time high of $ 230.52, which was reached on June 20, 2007. The first iPhone was released in the U.S. on June 29, 2007 and Blackberry has never been able to regain its former glory.
The company had pinned its hopes on the Z10, but sales have been weak and less than four months after the device was released leading carriers began to offer discounts of as much as 75 percent. Given the failure of the Z10 to win back customers, the only value that remains at BlackBerry is in their patents.