[bbq10l]

Why Apple Will Buy BlackBerry
Oct 30 2013, 09:46 �|� about: BBRY BOOKMARK / READ LATER
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

BlackBerry (BBRY) was once the most popular smartphone maker in the world. But things did not last long. The company is now a money bleeding mess, having lost almost $1 billion last quarter alone, with revenue dropping by 45%. It's a sad story for what was once the most valuable company in Canada. But there will soon be a happy ending, sort of.

BlackBerry gained it's massive following not because of it's appeal to regular consumer users, but because it was the communication device of choice for millions of corporate users. BlackBerry focused on delivering secure communication services over its private enterprise server network and this allowed it to win over enterprise customers worldwide. This is exactly the same technology which will come to its rescue again and it's the precise reason Apple Inc (AAPL) will soon see fit to enter negotiations to purchase the company. The blogosphere and many corporate analysts have been speculating about this union for a while, and I think now is finally the moment of truth.

Let's make one thing absolutely clear, Apple does not need to buy BlackBerry. Apple has it's own iMessage service which is comparable although not identical to the BlackBerry messaging service. It can be argued that most services offered by Apple are already better and in fact more established than those offered by BlackBerry. Regardless of this, there are some very compelling reasons for Apple to spend a tiny fraction of its immense cash hoard and buy this once great company.

Competition

The main reason that Apple should buy BlackBerry is simply to keep it out of everybody else's hands. Does Apple really want to see Microsoft (MSFT), Amazon (AMZN), Facebook (FB) or Google (GOOG) takeover BlackBerry and gain an instant position in the competitive smartphone market? With almost $150 billion dollars just sitting dormant on its balance sheet, Apple could casually toss BlackBerry a few bones and put it out of its misery. Even if they shuttered the company and never sold another BlackBerry smartphone, they would eliminate a competitor and keep a valuable property from getting into a large competitors hands.

Corporate Users

BlackBerry still has a large corporate user following which could be used by Apple to help it gain traction in the enterprise market. Enterprise users were early adopters of the BlackBerry platform and BlackBerry smartphones still hold a strong position in the corporate device market. Furthermore, corporate clients with large established IT departments are often slow to change their buying habits. There is a reluctance to completely switch platforms as this involves not only buying new devices, but also retraining workers in their use. Apple would be in a position to continue offering BlackBerry support to established clients while slowly integrating certain aspects of the BlackBerry platform into the iPhone ecosystem.

Security

The BlackBerry Enterprise Server infrastructure is still the most secure technology for corporate communication. In a world where security, privacy and secrecy is of utmost concern, Apple would be able to instantly capitalize on the integration of BlackBerry secure solutions into their own products. Even as Apple improves its own proprietary secure sharing technology, it would benefit directly from the name recognition that the BlackBerry encryption features have been known and respected for.

Technology

Patents and infringement litigation are huge issues for all technology companies. Even given the rapid pace of innovation in the mobile device space, old patents often come back to haunt companies. BlackBerry has thousands of valuable patents, estimated by some analysts to be worth almost $3 billion. In 2011, it joined forces with Microsoft and Sony to purchase a portfolio of patents from Nortel for $4.5 billion. And in 2012 BlackBerry was part of a consortium which included Microsoft, Facebook, Google and Samsung which bought a portfolio of patents from Kodak for $525 million. The bottom line is that even if Apple had no immediate use for the BlackBerry patents, they would benefit by having that intellectual property under their control and inaccessible to all other competitors. Intellectual property rights are a ruthless business, but for a company like Apple, which is facing tough competition for all sides, it must play all its cards in order to maintain dominance.

Valuation

BlackBerry is currently entertaining a takeover proposal from Fairfax Financial Holdings which values the company at $4.7 billion. From a balance sheet perspective, BlackBerry has zero debt, and cash and short term investments of about $2.6 billion, according to their latest quarterly release. Furthermore, they have a shareholder equity balance of $8.4 billion. Doing the calculations, we can see that the current offer values BlackBerry at less than 60% of it's book value. Even for a money losing company, this seems extremely low. Assuming no other bidders come forward, it would seem that Apple would be able to purchase BlackBerry for about $5 billion or less. With almost $150 billion in cash on their balance sheet, this would represent a negligible investment for Apple.

Conclusion

BlackBerry's days as an independent, public company are numbered. Their market position has been weakened substantially over the last 2 years and this has left them in a vulnerable position. Notwithstanding, the company still has a large user base and valuable intellectual property holdings. With proper technological integration, the BlackBerry platform would serve to bolster Apple's offerings in the enterprise market and keep a valuable property out of reach from competitors. A takeover of BlackBerry by Apple is a logical and ideal choice for both companies.

Source: Why Apple Will Buy BlackBerry


Posted via CB10

[jason9900]

Not going to happen. And keep in mind seeking alpha is the same site that adamantly stated BBRY will be at $45 a share by Christmas

Posted via CB10

[Blacklatino]

Hmmm.........interesting. This was mentioned a few months ago by some members. I don't believe it will happen. But, if it happened, I wouldn't have a problem with it.

[thedustytaco]

Uhhh why is this written in html? Lol

[bbq10l]

Uhhh why is this written in html? Lol

Because that is how my q10 copied and pasted it. If I had used my iphone, it would have been a clean copy/paste job...

Posted via CB10

[Dunt Dunt Dunt]

Hmmm.........interesting. This was mentioned a few months ago by some members. I don't believe it will happen. But, if it happened, I wouldn't have a problem with it.

It's been mentioned and mentioned and mentioned...... for well over a year now.


You would think Apple would do it just as a Tax right off of some type to counter all those 100 Billion in revenues they are making each year. The problem is once a fruit goes bad it can cause other fruits to start to decay..... Apple is going to stay as far away from BlackBerry as they can.

[Troy Tiscareno]

Apple has a history of making few, and small, acquisitions when they want to acquire a technology and fold it into their products. There isn't a lot that BB has that Apple needs, and Apple has rarely if ever bought a large company for one relatively small piece of that company that it wants, nor has it done many larger acquisitions, period.

Thus, the chances of Apple buying BB are basically zero. Apple's concerns, as far as they go, are Google, Microsoft, and Samsung. BB isn't even on the radar, for good or bad.

[gogurt48]

The main reason that Apple should buy BlackBerry is simply to keep it out of everybody else's hands. Does Apple really want to see Microsoft (MSFT), Amazon (AMZN), Facebook (FB) or Google (GOOG) takeover BlackBerry and gain an instant position in the competitive smartphone market?

I doubt Apple is panicked at the prospect of some other company picking up BlackBerry's 3% market share.

[scienceboy]

I doubt Apple is panicked at the prospect of some other company picking up BlackBerry's 3% market share.

They should be afraid of BlackBerry if combined with another major player, such as an IBM or Cisco or Facebook

Posted via CB10

[gogurt48]

They should be afraid of BlackBerry if combined with another major player, such as an IBM or Cisco or Facebook

Posted via CB10

Serious question: why?

[SlcCorrado]

People always ask, "what would it take for you to leave BlackBerry?"... Well folks, this would be it, haha

[heymaggie]

Apple should buy Blackberry simply out of gratitude for BBM for iOS. It's the key selling point needed to get a Blackberry user into an iPhone while keeping all of their important BBM contacts. And they did it just in time for the launch of the new iPhones.

[cbvinh]

Serious question: why?

Because those players would be willing to spend money to make money instead of just folding up shop to collect golden parachutes?

The up-for-sale BlackBerry has been in a holding pattern, which makes all potential customers go into a holding pattern. Once it's settled, the new owners can actual do stuff. Technology-wise, BlackBerry's are fine. The main complaints have been marketing and apps, which takes deep pockets to resolve and a willingness to risk some of the cash-on-hand, which the current BlackBerry seems unwilling to do, to preserve for-sale value.

[amazinglygraceless]

They should be afraid of BlackBerry if combined with another major player, such as an IBM or Cisco or Facebook

IBM and Cisco would only solidify BBRY's enterprise hold. They would do nothing to increase market share in the consumer space which is where BlackBerry's biggest challenge lies. Facebook, for all the speculation, is in my mind a total non-starter.

[David Murray1]

Apple as a company and, dare I say it, a kind of 'cult' among its followers, is by far too arrogant and elitist to even entertain the slighest notion of acquiring BlackBerry. That would simply make THE SACRED APPLE INPURE and SACRILIGIOUS. Their 'the sun shines out of our a-hole' philosophy would be tainted by association with something so obviously 'inferior'.

[BBVegasGirl80]

NO.

Sent from my sexy white hot Z10 in Sin City ;-)

[cbvinh]

Apple as a company and, dare I say it, a kind of 'cult' among its followers, is by far too arrogant and elitist to even entertain the slighest notion of acquiring BlackBerry. That would simply make THE SACRED APPLE INPURE and SACRILIGIOUS. Their 'the sun shines out of our a-hole' philosophy would be tainted by association with something so obviously 'inferior'.

It's too late... they've already touched Microsoft...

[web99]

It would most likely be the end of BlackBerry if Apple bought the company. They would take the good parts for themselves and throw the rest away.

Posted via CB10 from my spectacular Z10

[Eumaeus]

It would most likely be the end of BlackBerry if Apple bought the company. They would take the good parts for themselves and throw the rest away.

Isn't this what any responsible buyer would do? What is the alternative... keep the bad parts and give the good parts to their competitors?

[Spades1234]

Smells like glue and/or gasoline in this forum.






?10

[Troy Tiscareno]

Apple as a company and, dare I say it, a kind of 'cult' among its followers, is by far too arrogant and elitist to even entertain the slighest notion of acquiring BlackBerry. That would simply make THE SACRED APPLE INPURE and SACRILIGIOUS. Their 'the sun shines out of our a-hole' philosophy would be tainted by association with something so obviously 'inferior'.

Very ironic statement considering it's posted on CRACKBERRY, a website named for the obsessive and elitist BlackBerry users, who tend to be everything they accuse Apple fans of being.

[BennyX]

Apple doesn't need Blackberry. If it wants to take what's left of BB's market, it will. At this point I don't think Apple is too concerned with chasing that market, considering they make more money than they know what to do with as it is...

[bombastic]

Very ironic statement considering it's posted on CRACKBERRY, a website named for the obsessive and elitist BlackBerry users, who tend to be everything they accuse Apple fans of being.

Wow that almost hurts. In that light, the same could be said for all other specific smartphone websites out there. But it simply isn't true. No good to generalise. Furthermore, some of those so called elitists and/or obsessive BB users carry Android phones and maybe even an iPhone as well.
So much for name calling

[stackberry369]

Very ironic statement considering it's posted on CRACKBERRY, a website named for the obsessive and elitist BlackBerry users, who tend to be everything they accuse Apple fans of being.

someone's been huffing too much paint vapors.