Market thinks again about BlackBerry’s worth after Facebook swoop on WhatsApp

Maybe BBM is worth a lot more than previously reckoned

john chen

bbm is core asset - chen

Shares in struggling Canadian smartphone maker BlackBerry surged last night [19th February 2014] in the wake of Facebook’s $19 billion takeover of mobile-messaging startup WhatsApp, and which in turn made analysts rethink BlackBerry’s own worth. Though Blackberry was an early pioneer of mobile messaging, its stubborn refusal to open up BBM to users of other platforms – aligned with competition from the likes of Apple and Samsung on the hardware front – meant it fell into the doldrums. Its stock price has similarly suffered, slumping from a high of around 83 pence in 2009 to less than a tenth of that in recent months. Its failure to woo any takeover suitors has also kept in investors at bay.

But last night, as news broke of the WhatsApp deal, investors were forced to think again about BlackBerry’s worth, sending its share price back up 9 per cent.

Facebook’s valuation of WhatsApp translates into roughly $42 for each of its 450 million users and, using similar metrics, analysts now believe BlackBerry’s messaging service – which has over 80 million active users – alone could be worth substantially more than the $3 per user that it has hitherto been pegged at.

Meanwhile, BlackBerry itself has provided some hope to long suffering investors by belatedly opening up the messaging platform to users of iPhones and Android devices.

However, CEO John Chen has so far indicated he has no intention of selling BBM, describing it as a “core asset.”

Ironically, in October last year [2013] Facbook was reported by the Wall Street Journal to be considering buying BlackBerry outright, with executives from both sides engaged in secret talks.

Plus CEO,Mark Zuckerberg admitted at the time that his ambition was to get the social networking site on “as many phones as possible” – the rationale also said to be behind his purchase yesterday of WhatsApp.

* Shares in Mobile Streams, the UK provider of apps, games and other online content, surged by more than 20 per cent on London’s junior Aim market today [20th February 2014] as investors pondered what Facebook’s acquisition of WhatsApp might mean for others in the sector.

Mobile Streams shares have hitherto suffered from the fact that 85 per cent of its revenues emanate from Argentina where the government has imposed strict controls on foreign exchange, making it difficult for non-Argentine firms to repatriate their profits. Making matters worse has been the falling value of the Argentinian Peso.

But with the firm’s shares at a bargain low, it’s thought it too might be ripe for takeover as firms like Facebook trawl for content and app providers to drive traffic towards their own businesses. Shortly after midday Mobile Stream’s share price stood at 38 pence, having opened at 33 pence.

About Dave Evans

Dave Evans is a long established commentator on both the IT and cellular industries. His current focus is on share price trends within the sector. You can email him here
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