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Was a Sellout Part of the BlackBerry Turnaround Plan?

BBRY is now officially exploring options, including a sale

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While numbers have been disappointing so far, the company does have a spanking new OS in BB10 that’s living up to its predecessor’s reputation for security — something enterprise and government customers like. There are the new BB10 smartphones to go along with it, the Q10, Z10 and Q5.

There’s also BlackBerry’s cash reserves and its patent portfolio. Those cash reserves are still at $3.1 billion. No one knows for sure how much the patents might bring, but in a litigious technology sector where patents are coveted for defensive purposes and as potential weapons, they could be worth in the $1 billion to $4 billion range.

Various studies have attempted to put a monetary value on the company’s user base and services (such as BlackBerry Messenger), but assigning an actual dollar figure for these is a tough call — their value is contingent on keeping the customers and having them continue to pay for services that might or might not survive a sale of the company.

Making things even murkier, a cheaper Q5 BB10 phone is headed to traditional BlackBerry strongholds in Latin America, but the company will face increased competition there. Chinese manufacturers like ZTE and European carriers like Telefonica (TEF) are aggressively targeting these emerging markets with cheap smartphones running Android and the new Firefox OS.

As BGR puts it, with all the variables in play, any potential buyer trying to determine how much BlackBerry is actually worth would be flying blind at this point.

Going private is an option that’s obviously on the table. Prem Watsa sees something in BlackBerry, and his resignation from the board indicates he might try something along those lines. Time and the ability to transform a struggling company without investors demanding quarterly progress is the same goal Michael Dell has in his bid to take Dell (DELL) private.

With trading resumed, BBRY is currently up by more than 5% (it was up 9.4% in premarket trading), though at roughly $10.25, it’s still a far cry from the nearly $15 it was sitting at before its June earnings report with news of a loss, disappointing smartphone sales and declining subscribers sent it plummeting 30%.

An analyst with Canada’s BMO Nesbitt Burns was quoted in the Globe & Mail on Friday as saying: “We are maintaining our market perform rating. Our valuation puts the stock value at $8 based on fundamentals, but we could see more excitement as we learn of strategic alternatives for the company.”

I guess we’ll find out how much that “excitement” is worth in coming days.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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