As BlackBerry's board of directors formally begin exploring "strategic alternatives," they'll find their options limited, according to two IT sector analysts. All the likely alternatives call for a much diminished company, or broken up into some software assets and a brand value that's declining every day.
The board announced Monday the creation of a special committee to explore options to "inhance value and increase scale in order to accelerate" deployment of its BlackBerry 10 mobile operating system and server applications. In theory, everything is on the table, according to the company's statement, including "possible joint ventures, strategic partnerships or alliances, a sale of the Company or other possible transactions."
But potential partners, and buyers, are unlikely to see the same opportunities as BlackBerry's board, given that it's new generation of smartphones, running the innovative BlackBerry 10 operating system, have failed to ignite consumer interest since being released earlier this year.
BlackBerry's stock surged to $10.91 on Monday, from its Friday close of $9.76 per share, before finally closing at $10.78. It's past 52-week range is $6.22 to $18.32. Its market capitalization on Monday was $5.38 billion.
"BlackBerry is really three companies," says Jack Gold, principal for J. Gold Associates, an IT research and strategy consultancy. "There's BlackBerry the Device, BlackBerry the Services and BlackBerry the Community. Each has differing value."
The new BlackBerry 10 phones have received mixed reviews. Many reviewers game BlackBerry an "A" for effort but said the first phones suffer by comparison to the high-end iPhone and Android rivals like Samsung Galaxy S III.
Services assets include the BlackBerry Enterprise Services 10 server, for securing and managing multiple mobile operating systems, secure messaging, and the well-regarded BlackBerry Messenger for text and now video chat and collaboration. "It includes all themobile device management [MDM] stuff," says Gold. "A cloud-based, cross-platform solution [from BlackBerry] for MDM, mobile application management and security is the same market that companies like AirWatch and MobileIron have been going after. That could be an attractive stand alone [business], or an acquisition by one of the other layers in that space."
The community includes 60 million Messenger users, according to Gold and a total of global base of roughly 90 million. That base could possibly interest emerging smartphone makers in China and other parts of Asia, companies such as Huawei, ZTE and Tata, if they see those millions as evidence of still-existing brand value. Despite its massive decline in the U.S., "it's still a recognized brand," according to Gold.
"Could one of them buy instant brand recognition and leverage the market?" Gold asks. "They could under the right circumstances."
But the best outcome for BlackBerry is a leverage buyout that takes the company private, according to Gold. "Once that's done, you're a private business without stockholders or government overseers," he says.
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