patents and cash we believe a bid of roughly $14.20 is achievable
These are stories Report on Business is following Tuesday, Aug. 13, 2013.
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Analysts believe a sale of BlackBerry Ltd. could fetch up to between $14 (U.S.) and $20 a share, particularly in a "competitive" bidding process.
Thorsten Heins, CEO of Research In Motion, with the BlackBerry Z10 smartphone
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A new Blackberry Z10 smartphone is displayed at a store in New York, March 22, 2013.
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The valuations vary, and analysts are divided over whether suitors for the smartphone maker will include industry players or not. Some are betting on a “going-private” deal instead.
Their calculations came as BlackBerry shares continued to gain today, rising 1.4 per cent on Nasdaq to close at $10.93.
To recap, BlackBerry announced yesterday it has struck a special committee to pursue options, which could involve anything from a joint venture to a partnership to the sale of the company.
Prem Watsa of Fairfax Financial Holdings Ltd., BlackBerry’s biggest shareholder, quit the board “due to potential conflicts that may arise during the process.”
Indeed, Fairfax is studying ways to take the company private.
BlackBerry has 72 million subscribers, some $3-billion in cash and an estimated $3-billion in patents and licences. In the first quarter, sales of the new BB 10 smartphones, at 2.7 million, failed to meet the projections of analysts.
Analyst Gus Papageorgiou of Scotia Capital believes BlackBerry could fetch more than $14 a share.
And unlike some of his peers, he’s not ruling out some type of deal with an industry player such as IBM, Ericsson, Cisco, Oracle, Samsung, and perhaps even Apple.
“By partnering with one of these larger players we believe BlackBerry’s platform gains credibility,” Mr. Papageorgiou said in a research note.
“Currently, we believe the company’s technology is very sound; however, its tarnished brand and lack of credibility are holding back the adoption of its newly established services. A strong partner, we believe, could act as a catalyst to these services.”
Here’s how he breaks it down: BlackBerry’s net cash is worth $5.90 a share, and its patents an estimated $4.26. While he sees no bidder or partner paying anything for the actual handset operation, he values the services revenue and QNX system at $4 a share.
“Together with the patents and cash we believe a bid of roughly $14.20 is achievable,” Mr. Papageorgiou said.