Decision on selling needed soon as cash pile shrinks
Reuters news agency is reporting that several other bidders are now in talks with BlackBerry management to acquire the troubled manufacturer, with the probability that the existing $4.7 billion offer by Fairfax Financial will soon be trumped. According to the news agency, among those now circling the Canadian firm are Google, Cisco and SAP along with Intel, LG and Samsung. Although Reuters cites sources “close to the company,” it is unclear however which parties will bid. The potential buyers are said to be especially interested in BlackBerry’s secure server network and vast patent portfolio, but none has yet commented on the rumours.
Last month BlackBerry reported a quarterly loss of nearly $1 billion after taking a hit on unsold Z10 phones, while thousands of workers are also being laid off.
But a decision on the phone maker’s future will need to be taken soon, if only because the value of its patent portfolio and licensing agreements is expected to halve in the next 18 months, a company filing from this week shows.
Bernstein analyst Pierre Ferragu argues that BlackBerry’s assets include a shrinking but well-regarded services business that powers its security-focused messaging system, worth $3 billion to $4.5 billion; a collection of patents that could be worth $2 billion to $3 billion; and $3.1 billion in cash and investments.
But, he suggests, it’s likely to burn through almost $2 billion of its cash pile in the next 18 months, diminishing its attractiveness to other suitors.
Meanwhile private equity group Cerberus Capital Management has already asked for access to BlackBerry’s confidential audits, having expressed its interest in buying the company last week.