BlackBerry's tough spot: Keep enterprises, find buyer pronto

BlackBerry will have to sell itself quickly if it has much hope keeping enterprise customers in the fold. Analysts expect the Z10 meltdown to impact the company's mobile device management dreams.

BlackBerry's second quarter made it clear that the company dream of being a smartphone player again have died and its ability to be a leading mobile device management outfit may also be in question.

On Friday, BlackBerry said it will cut 4,500 jobs , report sales of $1.6 billion (nearly half what was expected) and take a massive writedown due to BlackBerry Z10 inventory. The plan: BlackBerry will circle the wagons around its enterprise and prosumer business and drop the consumer dream.

In many respects, BlackBerry's move makes sense, but a consumerization-driven mobile world makes the company's enterprise ambitions a tough sell. BlackBerry can remain a leading mobile device player focused on security, but IT buyers are likely to be reticent.

Analysts on Monday were busy trying to figure out what BlackBerry is now worth and what the future holds. The general theme: BlackBerry needs to sell pronto and accept whatever offer comes its way.

Jefferies analyst Peter Misek said his survey found that 18 percent of 50 IT executives at Fortune 1000 companies said they planned to use BlackBerry's mobile device management (MDM) devices to manage iOS and Android smartphones. AirWatch was also at 18 percent followed by SAP at 14 percent and MobileIron at 10 percent. Few of those likely BlackBerry MDM customers were going to upgrade to BlackBerry 10 devices.

That survey, which was conducted before BlackBerry's profit warning, indicates that there's potential if the company can move quickly and maybe split itself into two parts. Misek said:

We think a bid for the whole company is increasingly unlikely as most of the value is in services/MDM. We think the OS, BBM, and patents have some value while the handset business is now an albatross. We believe potential buyers will be price sensitive due to the sub-scale handset business and uncertainty around how much that diminishes the value of the services/MDM business.

Macquarie analyst Kevin Smithen said the company needs to sell soon or it's doomed. "We believe BlackBerry's board, management, major shareholders and the Canadian government will need to accept a low offer quickly before liquidity becomes an issue and valuable enterprise services customers depart en masse," said Smithen.

Smithen estimates that BlackBerry device business is worthless. Software and services is probably worth about $4.59 a share. Cash and patents make the company worth $7.02. BlackBerry closed at $8.73 on Friday. 



Other analysts value BlackBerry at about $12 a share due to real estate and some value for the smartphone business.

So who would buy BlackBerry?

Analysts think the company could be sold in parts and taken private. Co-founder Mike Lazaridis could buy the company and smartphone makers may take parts of the business for the security technologies and patents. One thing is clear: BlackBerry will have little to no leverage in sale negotiations.

Oppenheimer analyst Ittai Kidron noted the clock is ticking for BlackBerry.

BlackBerry is for now refocusing on its past strength, enterprise and prosumers. While logical, it's hard to see why either group would invest in BlackBerry given the eroding base and unknown future. A sale to a stronger entity could give the strategy a chance, but even then it's a tough position.