‘Structural Decline’
“It’s not a rough patch — it’s really a structural decline,” Peterc said. “They’re basically losing their core business, and it’s going to be costly to redefine.”
If the company stops making phones, it could focus on its enterprise business, which manages fleets of e-mail servers for corporate and government customers. Without its own devices to worry about, BlackBerry would be able to support all different models equitably. Still, shrinking demand for BlackBerry phones is going to take a toll on services revenue, said Anil Doradla, a Chicago-based analyst at William Blair & Co.
“The service business, which is very tied to the handset business, could rapidly shrink in the near term,” he said.
In a breakup scenario, the enterprise business may be worth as much as $1.1 billion, according to Raymond James Financial Inc. BlackBerry’s patents also may have value on their own. The intellectual property could fetch $1.6 billion to $3 billion, according to analysts’ estimates. Still, the lack of interest among bidders suggests that the patent value may be lower, said Michael Genovese, an analyst at MKM Partners LLC.