BlackBerry Ltd. indicated on Monday that it was seriously weighing a potential sale of itself. But it isn’t clear that anyone will want to pay up.
Analysts and industry executives said that a sale of the entire smartphone maker was increasingly unlikely, and almost certainly at least a year too late.
Investors have speculated that an embattled BlackBerry may prove attractive to a private equity firm. The company’s financial state is fairly clean: It has nearly $3 billion in cash and short-term investments. And it carries no debt, suggesting that it can support the financing that a leveraged buyout would require.
But that assumes a financial firm would be willing to shoulder the enormous risk that fixing a fading smartphone maker â€" one that competes with the iPhone and an army of Android-based devices â€" would entail. While Silver Lake is part of the duo trying to take Dell Inc. private, a private equity executive suggested that while corporations will always need personal computers, no one needs to buy a BlackBerry device.
One private equity firm that may be ruled out as a suitor: TPG Capital. The head of a special BlackBerry board committee reviewing the strategic review process is Tim Dattels, a senior partner of the investment firm. His presence on the committee would likely introduce conflicts that would provide fodder for shareholder lawsuits, according to Erik Gordon, a professor of the University of Michigan Law School.
Analysts suggested that while BlackBerry still has a big cash cushion and steady cash flow, growing subscriber losses and other disruptions to the company’s business make adding on debt exceptionally risky.
It also isn’t clear whether bigger competitors like Microsoft or Samsung would be willing to spend money on a beleaguered rival, at least at this point. Some analysts have likened a potential acquisition to Hewlett-Packard’s disastrous purchase of Palm Inc., which essentially led to the smartphone pioneer’s demise after only one year.
Amitabh Passi, an analyst at UBS, suggested that potential buyers may be willing to late BlackBerry flail about further before making a move, at a lowball price.
One natural set of buyers, Chinese companies like Lenovo, are considered the least likely to succeed. The governments of both Canada and the United States, who remain important BlackBerry customers, would almost certainly reject any deal involving a Chinese suitor.
There is the possibility that BlackBerry’s biggest shareholder, the Canadian investment firm Fairfax Financial, will have a role in any deal. V. Prem Watsa, the head of Fairfax, disclosed on Monday that he had resigned from the smartphone maker’s board to avoid possible conflicts that may arise from the strategic review. That suggests that Mr. Watsa will seek to partner with potential suitors, contributing Fairfax’s roughly 10 percent stake.
Analysts generally suggested that BlackBerry’s most attractive assets are its intellectual property, including some of its software and its various cellphone patents. Among its most desirable holdings is QNX Software Systems, a company that made the advanced operating system that underpins BlackBerry’s new line of BlackBerry 10 phones.
But while the latest crop of BlackBerry phones have fallen short of sales expectations, QNX’s operating systems remain in use as a highly stable operating sysftem for companies like General Electric and Cisco. QNX has also been used by car makers like General Motors, which uses one of the division’s systems in its OnStar service; Audi; and BMW.
BlackBerry’s chief executive, Thorsten Heins, has suggested that BlackBerry will use QNX’s automotive ties and its unique global data network to allow car companies to update vehicle software through wireless networks and to monitor vehicles’ mechanical state.
BlackBerry did not disclose what it paid for QNX nor does it break out its financial results making it difficult for outsiders to judge the subsidiary’s worth.
Then there is the company’s famed network. In its most recent quarterly report, BlackBerry reported having roughly 72 million users worldwide, most of whom were still generating monthly services fees by sending data over the company’s special closed network. That business could entice some buyers, even if its long-term outlook is likely one of decline.
Mr. Passi suggested that a potentially far-fetched buyer might be I.B.M., which has long demonstrated an interest in corporate services.
But the highly centralized network, which is based on aging technology, has led to widespread and embarrassing service failures, a potential turn-off to would-be buyers.
BlackBerry also owns a trove of patents, but conflicting assessments abound about their worth. In previous years, analysts have pointed to high-priced intellectual property deals like a consortium’s $4.5 billion purchase of Nortel Networks’ patents and Google‘s $12.5 billion takeover of Motorola Mobility as promising signs.
Analysts historically have estimated the value of BlackBerry’s portfolio at $1 billion to $3 billion. But those expectations, too, have begun to sag.
Many of the company’s patents, while essential to BlackBerry itself, cover technologies that may be near their expiration dates. And the smartphone maker does not control several key patents co-owned by its partners in the Nortel consortium, which include Nokia and Apple.
In a research note on Friday, Mr. Passi of UBS estimated BlackBerry’s patent portfolio at $1 billion to $2 billion. But in a telephone interview on Monday, he played down that valuation, citing concern that the onetime froth around patent deals has started to subside.
“I’m not even sure they’ll be able to get to the higher end,†Mr. Passi said.
