BlackBerry is up for grabs and the troubled Canadian handset maker is seeing interest from across the tech sector. The company is in talks with the likes of Cisco Systems, Google, SAP, Intel, LG and Samsung are selling itself -- or parts of itself.
At least that’s what Reuters is reporting in an “exclusive” that cites “several sources close to the matter.” BlackBerry could not immediately be reached for comment.
The news comes after the company’s largest shareholder, Fairfax Financial Holdings, announced a $4.7 million deal to take the company private. That bid was criticized by some because financing wasn’t announced as part of the deal.
Fairfax Primed the Pump
None of the potential bidders were immediately available for comment and several declined to comment to Reuters. The report didn’t clarify which of the tech giants may actually bid on BlackBerry or what parts of the company they are eyeing.
We caught up with Avi Greengart, a principal analyst at Current Analysis, to get his take on the flood of interest. He told us that it appears the announcement of the Fairfax bid was the right move.
“The bottom line is that the deal that Blackberry struck with Fairfax Financial holdings was a placeholder. It was clearly designed to try to put a floor under the stock. Fairfax did not even line up financing when it made its deal, which is conditional on all kinds of factors. It can basically back out with no penalty,” Greengart said.
“The hope is that BlackBerry will generate interest from other companies. The question is do others find enough value in the various pieces of BlackBerry or in the whole to justify a higher bid than $4.7 billion less the $2.6 billion in cash that BlackBerry has on its books?”
Picking BlackBerry Apart
BlackBerry got what it hoped for, at least in part. The stock has stopped its nose dive and the potential value of the company is being explored.
Greengart said there is value in the Intellectual Property, the cash horde, and potentially even in the devices. He also pointed to the service software, network operating centers and BBM as possible attractions.
“Because BlackBerry at this point is open to anything, some of these bidders may be just looking for different pieces of the company rather than buying the whole thing upright,” Greengart said. “But that alone could lend some fortitude to someone else making a bid.”
BlackBerry is sinking quickly. Revenue for the second quarter of fiscal 2014 was about $1.6 billion, down 49 percent from $3.1 billion in the previous quarter and down 45 percent from $2.9 billion in the same quarter of fiscal 2013. The revenue breakdown for the quarter was about 49 percent for hardware, 46 percent for service and 5 percent for software and other revenue.
During the second quarter the company recognized hardware revenue on approximately 3.7 million BlackBerry smartphones. Most of the units were BlackBerry 7 devices, in part because certain BlackBerry 10 devices that were shipped in the second quarter of fiscal 2014 will not be recognized until those devices are sold through to end customers. During the quarter, approximately 5.9 million BlackBerry smartphones were sold through to end customers.