Ailing smartphone maker BlackBerry has a new group of suitors. Google, SAP and Cisco Systems are in talks with Canada’s most famous tech company about buying parts of its business or the entire company outright, Reuters reported Oct. 4.
In August, following an extensive “strategic review” conducted by several outside financial advising companies, BlackBerry CEO Thorsten Heins announced that the company was open to “strategic alternatives,” which could include partnerships, a sale of the company or other options.
After what publically appeared to be very little response, BlackBerry announced roughly a month later that it had signed a letter of intent with a consortium led by Fairfax Financial Holdings, BlackBerry’s largest shareholder, which is prepared to pay $4.7 billion for the company. The terms of the deal state that the consortium has until Nov. 4 to perform due diligence, and during that time, BlackBerry can continue to shop itself around.
“It would not be surprising that a variety of companies may be kicking the tires, given the drop in BlackBerry’s market value and its unique collection of enterprise-focused assets,” Gartner Principal Research Analyst Bill Menezes told eWEEK, adding that to his knowledge, Fairfax is the only company to have confirmed its interest.
A number of analysts have called the Fairfax offer ideal, in that it would allow BlackBerry to privately regroup and in all likelihood emerge smaller and more focused but solid.
Ken Hyers, a senior analyst with Strategy Analytics, said there have always been two scenarios for BlackBerry: the above one, in which it privately regroups and re-emerges, or being broken up into parts.
“The second path assumes that BlackBerry ‘s smartphone business cannot be turned around and that the segments of the company such as BES [BlackBerry Enterprise Server], its patents and its remaining base of customers are more valuable individually than the sum of their parts,” Hyers told eWEEK.
The company has a responsibility to its shareholders to explore all options that might deliver the most value, Hyers added.
That said, he added, “A breakup would be a real shame for BlackBerry, but it would result in parts of the company, particularly BlackBerry’s secure email service, living on somewhere else, and would guarantee some of its employees finding jobs at other stable companies.”
BlackBerry is essentially three businesses, Devices, Enterprise Services (BES) and Social Services (BBM), analyst Jack Gold, with J. Gold Associates, pointed out in an Oct. 7 research note, in which he offered a rundown of what each might be after (while also noting that the three companies’ interest is still speculated).
Cisco, which has previously failed to offer hardware, could be interested in BlackBerry’s secure network environment, adding it on to its WebEx social network, to make it more secure for enterprises, or they could go after BBM, said Gold.
“Although I don’t see them wanting to maintain the large consumer users base, but rather redirect it towards the enterprise users (again, adding to its existing social networks product base),” he wrote.
SAP could be interested in one of two things, Gold continued. The first is BlackBerry’s patent portfolio, and the second is BBM, “which SAP could attach/integrate to its 365 unit, which sends huge numbers of text messages every day and includes a financial services piece … that could clearly benefit from the security built into BBM.”
As for Google, it could benefit from BlackBerry’s patent portfolio; from its BBM network, “which offers a potential monetization engine that Google could leverage,” or it could fold BlackBerry’s handset division into Motorola.
The bottom line, he added, is that none of these companies are likely to buy BlackBerry and run it as a whole. “I’m still of the opinion,” Gold concluded, “that the Fairfax deal could be the best way forward for BlackBerry.”