BlackBerry’s patent goldmine could exceed its value as a smartphone maker: Analysts

BlackBerry could be worth more as a patent catalogue than as a smartphone manufacturer, according to leading analysts.

According to a Scotiabank analysis republished by the Wall Street Journal, even at a deep discount to the per-patent price paid for Nortel and Motorola’s patent catalogue, BlackBerry’s patents could be worth as much as $2.25 billion.

“We have been suggesting a value of roughly $2.25 billion based on a discount to what was paid for the Nortel patents, given the sale of those patents occurred at a particularly opportune time.

“Again, those patents sold for roughly $1 million each and the Motorola patents sold for roughly $735,000. Given that BlackBerry maintains roughly 5,136 patents, to get to our $2.25 billion number the patents would have to sell for $438,000 each or a 40% discount to the Motorola patents and an almost 60% discount to the Nortel patents.”

With over 1200 patents, Research in Motion holds more patents than Google/Motorola and Nokia, but fewer than Apple or Ericsson.

While BlackBerry’s current market value stands at $US5.5 billion, it holds around $US2.8 billion in cash and short-term investments and no debt. If Scotiabank’s analysis is correct, the total value of its cash and patents is around $US5.05 billion.

According to an earlier article by Tom Simonite in the MIT Technology Review, BlackBerry’s cryptography patents could be particularly valuable.

“BlackBerry subsidiary Certicom owns patents crucial to using a form of encryption that the US and other governments say is the best way to protect sensitive data, and should replace the methods relied on to secure the Internet today.

“Certicom’s near monopoly on implementing that technique, known as elliptic curve cryptography, means it is rarely used today outside of emails sent by Blackberry devices and communications by the US and other governments.”

Recently, SmartCompany reported the company announced the creation of a special five-member board to examine sale options, on the same day its largest shareholder, Prem Watsa, dramatically resigned from the board of directors.

Watsa’s Fairfax Financial Holdings – which is not related to the Australian media company – is the largest individual shareholder in the company, having purchased a 9.9% stake in the company for $880 million.

The resignation followed an exodus of senior executives from the company during recent weeks, including corporate information technology operations vice-president Doug Kozak, global manufacturing and supply chain senior vice-president Carmine Arabia, and service operations vice-president Graeme Whittington.

Watsa, along with the Canada Pension Plan, are shaping up as key bidders for the company amidst widespread speculation about plans to take the company private.