Should Microsoft Pick at BlackBerry's Carcass?
Once again the soap opera surrounding BlackBerry took an unexpected turn and the struggling former mobile handset leader's already uncertain future became even more questionable. The $4.7 billion buyout by BlackBerry's largest shareholder Fairfax Financial Holdings that was reached in September fell apart yesterday, resulting in CEO Thorsten Heins stepping down in the wake of the news.
As a result of yesterday's drama, which caused the company's stock to plummet 16 percent, Fairfax and undisclosed investors are instead issuing $1 billion in debt securities that can be converted to stock at $10 per share. Meanwhile taking the helm as "acting" CEO is John Chen, the longtime CEO of Sybase. When Chen took over Sybase, it was a onetime large database company that found itself on the brink. Sybase fell on hard times after being squeezed by Oracle, IBM and onetime partner Microsoft, which it ironically helped get into the database market.
While Sybase never was able to regain the share it lost to Oracle, IBM and Microsoft, Chen oversaw the company's expansion into mobile middleware and the development of an in-memory database. Those moves made the company attractive to SAP, which acquired Sybase in 2010 for $5.8 billion, a 40 percent premium to its market cap at the time of the deal.
It remains to be seen whether Chen plans to take "acting" off his title, or merely stand-in for a new CEO. But if Chen does have long-term plans for BlackBerry that might suggest the company may not be destined to be sold off in pieces as many have predicted will happen.
Indeed Microsoft, along with Amazon, Ericsson and Google were "possible buyers" for BlackBerry, an informed source told The Wall Street Journal, because they were interested in pieces of the company but they all ultimately walked away.
It appears there's little BlackBerry has to offer Microsoft, as reported by technology journalist Mary Branscombe in September. She points out BlackBerry has little to offer Microsoft: the company has no need for its hardware or operating system. Thanks to Skype the once popular BBM (BlackBerry Messenger) would offer little value. Nor would there be value from its enterprise "crown jewel," the BlackBerry Enterprise Server (BES), thanks to mobile device management capabilities in the latest versions of Exchange, System Center and Windows Intune. Given Microsoft's tendency to license patents and not buy them, Branscombe said it's unlikely Microsoft would buy the company for $5 billion just to get them.
I have to agree with her points and even though Microsoft shocked those who never thought the company would acquire Nokia's handset business, it still appears unlikely the folks in Redmond are going to spend heavily for BlackBerry. That doesn't mean there won't be licensing deals or other partnership possibilities. That could be especially possible if Chen decides to focus on expanding BlackBerry's technology assets rather than take the company to the chop shop.
Posted by Jeffrey Schwartz on 11/05/2013 at 1:58 PM