The end is nigh for BlackBerry, or at least it is in its current state anyway. As of yesterday, the company published a “letter of intent,”stating its plans to sell itself to shareholder Fairfax Financial and become a private company once again. Supposing the deal goes ahead – and it’s likely to do so – Fairfax will but BlackBerry at the low price of just $9 per share, way below where its share price stood on Friday afternoon, just before the company announced the redundancies of some 40% of its staff.
That BlackBerry has struggled to sell itself, even at that dirt cheap price, is a fair indicator of just how low its fallen. It seems as if even the world’s most successful tech companies aren’t very confident that BlackBerry’s fortunes can be turned around, but that doesn’t mean that the company doesn’t have some value, particularly when it comes to its patents and its software.
Its this remaining value that’s prompted Fairfax Financial, Blackberry’s single largest shareholder, to make its move:
“We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world,” stated Fairfax’s CEO Prem Watsa.
Any deal won’t be finalized until November 4 at the earliest, up until which BlackBerry is still open to other offers. Yet even though companies like Microsoft could clearly benefit from making a last minute swoop, the prospect of them doing so remains unlikely. And so BlackBerry is where it is – stuck in the hands of Fairfax, an insurance company with zero expertise in the smartphone industry.
So what does Fairfax intend to do with BlackBerry now?
“The plan appears to be to position the company as the go-to provider of systems to manage smartphone use for employers like the government and banks, where the need to ensue security is at a premium,” noted The Wall Street Journal.
What that means is, rather than try to save BlackBerry’s phone business or its operating system, what Fairfax will try to do next is sell off its security services and patents to other companies for the best possible price.
Are The Parts Greater Than The Sum?
BlackBerry is in a mess alright, but it still managed to agree on a price of $4.7 billion – an amount that’s in line with previous estimates of the company’s worth, and one that could see Fairfax fetch a decent profit if it can find buyers for the following:
BlackBerry Messenger, valued at $1.2 billion: That’s how much Christopher Mims in Quartz estimates BBM, BlackBerry’s free messaging system, together with it’s “enterprise infrastructure”. Quartz notes that WhatsApp, a similar messaging system, was the subject of a rumored $1 billion takeover from Google earlier this year. Whilst BBM essentially offers more or less the same thing, it does have a few advantages, most notably its high level of security – so secure is BBM in fact, that it’s still the messaging platform of choice for governments around the world, and the business also comes with BlackBerry Enterprise Server software that countless corporations and governments run behind their firewalls.
BlackBerry’s patents, valued at $1 billion: The true value of BlackBerry’s portfolio is somewhat unclear, and the $1 billion valuation is thought to be at the lower end of the spectrum, with some analysts putting their value at closer to $5 billion. Truth is, some of the patents BlackBerry holds could well prove invaluable to certain companies (such as Google, Apple or Microsoft), which may be interested in buying them simply to prevent other companies from getting to them first.
BlackBerry’s Bank Balance, $2.8 billion, according to Zdnet.
Assuming that Fairfax does indeed go ahead and buy BlackBerry at the agreed upon $4.7 billion, it represents a decent bit of business from the investment company. Even if BlackBerry’s patents only fetch $1 billion, that still leaves it with a tidy $300 million profit – and of course if they can find the right buyer, it could easily pocket a whole lot more.