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BlackBerry Ltd's withering smartphone business means potential acquirers will pick over its more alluring assets, including software and patents, which together may be worth about $5 billion, roughly in line with the company's current market value.
The phone unit, BlackBerry's biggest source of revenue, is essentially worthless because most buyers would shut it down in favour of their own technology, at a cost of as much as $800 million, said analysts at Raymond James Ltd and BMO Capital Markets. Its patents, software and a secure network are each worth more than $1 billion, the analysts said, and the company has about $2.8 billion in cash.
The Waterloo, Ontario-based company appointed board members last week to analyse a sale or new partnerships to try to turn the company around.
The value of the hardware unit may plummet further as customers shy from buying a device whose future is up in the air, leading acquirers to gravitate to BlackBerry's other assets, Brian Huen, managing partner at Red Sky Capital Management, said by phone on August 19.
"You're effectively killing that business by saying 'I'm up for sale,'" said Huen, whose Toronto-based firm manages about C$220 million ($212 million) in assets including BlackBerry shares.
"Nobody is interested in buying the entire entity. I think they are now in the phase of saying, 'We will do anything to maximize value, including breaking up the company.'"
