BlackBerry shares rally after Nokia deal

Shares in embattled smartphone maker BlackBerry rallied 3.6% following the announcement of Microsoft’s takeover of Nokia’s services and devices division.

As SmartCompany reported, the Canadian smartphone maker recently 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 – 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.

BlackBerry’s current market value stands at around $US5.5 billion, with the company around $US2.8 billion in cash and short-term investments along with no debt. A recent ScotiaBank analysis placed the value of its share portfolio at $2.25 billion, including its Certicom elliptic curve cryptography patents.

Based on the ScotiaBank figures, the total value of BlackBerry’s cash and patents is around $US5.05 billion.

Aside from manufacturing smartphones, BlackBerry owns embedded systems company QNX, which sells a real time operating system for a range of mission critical situations including nuclear power plants, auto components through its QNX CAR application, and spacecraft.

QNX also forms the kernel of the Blackberry 10 operating system, which has replaced its legacy operating system on its Z10 and Q10 smartphones.

The company also owns the BlackBerry Messenger, which is currently being made available to some Samsung devices running Android, and BlackBerry Enterprise Server communications platforms.

Earlier this week, BlackBerry director Bert Nordberg said the company might survive as a niche smartphone manufacturer, but non-core assets would have to be sold off.

Watsa’s 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.

However, as Atlantic Equities analyst James Cordwell explained in an interview with Reuters, a takeover or partial takeover of BlackBerry remains a very different proposition to the deal between Microsoft and Nokia.

“Nokia was already using the Microsoft’s Windows platform, so integration-wise it is relatively straightforward,” Cordwell said.

“Whereas if anyone acquires BlackBerry, they will be acquiring it more for its network infrastructure and patent assets, as opposed to its handset business, so it will be a very differently driven deal.”