BlackBerry Ltd. (TSX:BB)(Nasdaq:BBRY) is undeniably one of Canada\’s most polarizing stocks.
Supporters of the company point to its renewed focus on software and it is stronger balance sheet. They note how far the company originates under new CEO John Chen, even while the stock prices are back where it started.
Detractors possess a point too. They point to the declining handset sales and repair revenue. A whole lot worse, the mobile device management (MDM) market has become far more competitive within the last year. Profitability remains practically nonexistent. And when that wasn\’t bad enough, BlackBerry\’s brand seems to be holding back the company.
BlackBerry Ltd touts its software in Ny, but includes a tough sell ahead
The truth is, it\’s impossible to understand how successful Mr. Chen\’s efforts is going to be. We also have no clue which way BlackBerry\’s stock price goes. But here\’s something we can be pretty sure of: Samsung offered US$7.5 billion for BlackBerry back in January. In Canadian dollar terms, that actually works out to $19 per share.
According to some report by Reuters, BlackBerry rejected the offer, claiming it grossly undervalued the company. But it may be time to revisit the idea. Below we take a closer look.
Why BlackBerry is better off in another person\’s hands
As we all know by now, BlackBerry is shifting its focus from handsets to software. Unfortunately the business\’s sagging handset business seems to be holding back software sales. This is because simple: enterprise clients are reluctant to buy software from the company they see as with decline. Put simply, BlackBerry\’s battered brand is hurting software sales.
Mr. Chen seemed to acknowledge this in May while speaking in Kitchener, Ontario. As he put it, \”Not sometime ago, the company was in deep deep trouble. We\’re now out of trouble in terms of financial, but we haven\’t established a growth- until that occurs nobody will go willingly buy our products.\”
If BlackBerry were in another company\’s hands, for example Samsung, it would no longer suffer from that problem.
Samsung is still a great candidate
Samsung is particularly suitable for BlackBerry. The company has struggled to achieve traction within the enterprise market, which is always BlackBerry\’s bread and butter. Better yet, Samsung might make great use of BlackBerry\’s 44,000 patents because it fights Apple within the courts.
In any case, it\’s hard to assume BlackBerry being more vital than what Samsung was prepared to pay.
Don\’t hold your breath
Even though an acquisition makes perfect sense, don\’t expect it to happen anytime soon. Mr. Chen and the rest of BlackBerry\’s board are going to continue the turnaround effort for the time being, and probably won\’t quit for quite some time.
But eventually, BlackBerry will likely have to be sold, if the turnaround is successful or not. This really is worth keeping an eye on.
Fool contributor Benjamin Sinclair doesn\’t have position in almost any stocks mentioned. David Gardner owns shares of Apple. The Motley Fool owns shares of Apple.
The original version of this article can be seen at www.fool.ca