BlackBerry Talks Buyout With Google, Intel, Cisco

BlackBerry attracts potential buyers for its patents, not phones.

Despite undergoing a makeover in January, BlackBerry announced Friday that it would soon lay off 40 percent of its workforce.
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BlackBerry's phones appear to be ringing off the hook with sales interest, as companies including Google, Intel and Cisco are considering offers to buy the company and counter the existing $4.7 billion buyout offer proposed by Fairfax Financial Holdings Limited.

Canada-based BlackBerry has asked for preliminary expressions of interest from potential strategic buyers including Google, Intel, Samsung and Cisco by early this week, but it is unclear which of the companies will bid, Reuters reports.

BlackBerry announced on Sept. 23 that it entered into a letter of intent agreement for a $4.7 billion buyout with a consortium of companies led by Fairfax Financial Holdings Limited, which already owns 10 percent of the company's shares. That could provide a hurdle for companies that make rival bids during the "go-shop" period when BlackBerry can accept rival offers.

[READ: BlackBerry attracts potential buyers for its patents, not phones]

BlackBerry wrote in an emailed statement that it would not "disclose further developments with respect to the process until we approve a specific transaction or otherwise conclude the review of strategic alternatives."

"The special committee, with the assistance of the company's independent financial and legal advisors, is conducting a robust and thorough review of strategic alternatives." the statement said.

BlackBerry's standing as a once-dominant mobile phone company has dropped since the rise of smartphones designed by Apple and manufacturers who use Google's operating system. BlackBerry reported a net loss of approximately $1 billion in the quarter ended August 31, mainly due to write downs on its unsold phones, so it is unlikely that buyers are interested in purchasing the company to continue making its phones, says Ramon Llamas, research manager for the mobile phones team at the International Data Corporation (IDC) analyst firm.

The latest blow to BlackBerry's dwindling popularity came from Rogers Communications, the largest network carrier in Canada, which announced on Oct. 3 that it is not going to carry BlackBerry's latest Z30 phone.

It's uncertain whether potential buyers will continue making BlackBerry phones, but the company's secure server network and patent portfolio still have value for buyers, Llamas says. Samsung, which manufactures phones that use Google's Android operating system, would benefit from purchasing BlackBerry's network management software, which is popular among customers in businesses and government because it is secure, Llamas says.

"Samsung is looking to make inroads into business enterprise," Llamas says. "They have done it with Android, but for better or worse the Android is looked on with suspicion since it is more open to third parties. It's still new, while BlackBerry has been around longer and has a reputation for being secure. It could make Android more business-friendly."

[READ: BlackBerry Fires 4,500 Workers Days After Z30 Phone Launch]

Intel could use BlackBerry's security network and patents to offer more secure devices and chip solutions to its hardware partners and the networks the hardware runs on, Llamas says. Cisco is already a provider of secure network services, so purchasing BlackBerry's security technology could "be mutually strengthening since both companies excel in that area," and would appeal to multinational companies, he says.

The BlackBerry Messenger platform could also attract interest from Google because it has potential for video messaging, Llamas says.

 

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