Seeking Alpha
Long/short equity, deep value, special situations, contrarian
Profile| Send Message|
( followers)  

Just when you thought BlackBerry (NASDAQ:BBRY) is over and done with, out comes another piece of news that changes the whole equation. A while ago we learned that Cerberus Capital might be interested and signed a confidentiality agreement to kick BlackBerry's tires. Then over the weekend, Reuters report that a whole host of other companies are also interested.

For those of us who follow the company closely, the fact that several companies might be interested is not that much of a surprise. The surprise is that it did not happen earlier.

According to a recent article via Reuters, among the list of companies that are about to kick BlackBerry's tires are Google (NASDAQ:GOOG), Cisco (NASDAQ:CSCO), SAP (NYSE:SAP) and Samsung (OTC:SSNLF).

Google I think it is probably interested in BlackBerry's patents as opposed to the device division or anything else. Google, with the acquisition of Motorola is now a full fledged device manufacturer and I don't think they are interested in expanding their devices business to BlackBerry's BB10 OS. Exactly what patents Google might be interested in is hard to tell, but one never knows how Google plans to use them. Either way, I don't think Google will put in a bid.

As for Cisco, I think BlackBerry will make a very good addition to the company. In fact, BlackBerry's corporate and enterprise culture will blend in just fine with Cisco. Cisco itself does not have a devices strategy. Having a devices strategy today is a must, since the smartphone revolution is changing the way we do things.

BlackBerry however, contrary to Apple (NASDAQ:AAPL), is not a consumer devices company, but an enterprise devices and services company similar to Cisco. Cisco is very enterprise minded and so is BlackBerry. Buying BlackBerry is a very easy way for Cisco to get into the devices business. It is also a very convenient way for Cisco to get hold of BlackBerry's very large corporate clientele. Besides the devices that Cisco can sell, as more and more companies adopt BYOD, Cisco would be right there picking up the MDM business with hardly any effort. Combined, the corporate clientele of Cisco and BlackBerry might make Cisco a near monopoly in the MDM business overnight.

SAP also does not have a devices strategy and buying BlackBerry would put it on the devices and MDM map overnight. And since is it also an enterprise minded company, there would be no culture issues with BlackBerry. In fact, there would finally be a European company that has its own ecosystem, if SAP were to be the buyer.

Samsung however is probably the most interesting case. I have said several times that Samsung is trying to find a way to get rid of Android, because Google is now a direct competitor and a long term threat. By buying BlackBerry, Samsung can at last obtain a world class smartphone OS of its own with no hassle, and concentrate on how to ditch Android. In fact, if Samsung buys BlackBerry, it does not have to get rid of Android overnight, but can take its own sweet times as it builds up the BlackBerry brand.

The interesting thing about Samsung is that it's a consumer oriented company like Apple. So it will either make BB10 a consumer success over the next several years -- and ditch Android in the process -- or it will simply keep BlackBerry as its enterprise class OS along with devices and the MDM business and continue with Android.

As I see it, BlackBerry opens up a world of possibilities (and opportunities) for Samsung, and also provides a win-win proposition that Samsung can't get elsewhere. If the Canadians let Samsung place a bid, I think Samsung will be the buyer.

The big surprise for me is that Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM) were not on the list. While both companies would benefit from buying BlackBerry, it is IBM that would most benefit. IBM also has no devices strategy whatsoever, and I am surprised that so far they have showed no interest.

Bottom line

Where there is smoke there is fire. And while we do not know where the fire is, we can see that there is smoke somewhere above Waterloo Ontario.

We do not know if eventually a buyer will emerge, but the good news for shareholders is that there is at least some heavyweight blue chip interest in the BlackBerry.

While I do not see Google making a bid, I do see the possibility that there might be a small bidding war between Cisco and Samsung. And if this does indeed happen, my hunch is that the price will not be $9 a share that Fairfax Financial is offering, but at least north of $12.

Source: BlackBerry Smoke Over Waterloo Ontario