Will BlackBerry Go Private?

Stephanie is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

It is no secret that BlackBerry (NASDAQ: BBRY) is troubled. While the company's phones are still used by corporations, BYOD is causing the company to lose its grip on that sector, as well. The market share of BlackBerry's OS has dropped to 2.9%, officially placing it below the Windows Phone.

The drop has many in the industry wondering if BlackBerry could be snatched up by another smartphone-maker--perhaps Microsoft (NASDAQ: MSFT), whose Windows Phone is still lounging at only 3.7%. To take on giant Android, which holds more than 79% of the market, Microsoft needs an edge, but corporations seem to be shying away from the very smartphone that was once the preferred choice for checking corporate e-mail.

Hope for BlackBerry

In its last earnings announcement, BlackBerry announced a 9% increase in revenue year-over-year to $3.1 billion. This number was up 15% from the previous quarter. The company's losses narrowed to $84 million, which was a significant drop from its fiscal year 2013 losses of $510 million.

Shareholders have high hopes for BlackBerry 10, which sparked a surge in the company's smartphone shipments during the most-recent quarter. BlackBerry shipped 6.8 million smartphones, with about 40% of those being BlackBerry 10 devices. With its new BlackBerry Z10, the company provides a larger screen, (with a look closer to its Android and iOS competitors), which gets away from the company's trademark look.

Private or Sell?

As BlackBerry continues to try to fix its business, the company has been considering going private. Rumors are floating that BlackBerry's board will drum up cash from private investors to go private, but analysts are doubtful private investors will be willing to put money into the failing smartphone maker.

A different investment may be likely. If BlackBerry could align itself with a larger, more powerful business, say Microsoft, it might stand a chance at competing with the big dogs. But would Microsoft go for such a move?

Despite its success in other areas, Microsoft has a long way to go when it comes to smartphone sales. The company has Nokia's agreement to carry its O/S, but the Windows Phone is still well below Apple and Android. In its most recent quarter, Microsoft's disappointing earnings were blamed on the Surface, proving the company needs to make a bold move to capture the mobile-device market.

As PC sales continue to drop, Microsoft is trying to recover from a $900 million charge related to an inventory adjustment for its Surface RT. Despite this, the company posted a 10.1% increase in revenue from a year ago, which was when the company reported a $492 million loss. As it tries to recover from the slow adoption of its Windows 8 operating system, a buyout of BlackBerry could provide the boost it needs to combat the sinking PC and laptop market.

The partnership

Another option for BlackBerry is a deeper partnership with Samsung (NASDAQOTH: SSNLF) since the two companies are already working together. Samsung will include the BlackBerry Messenger in its Samsung Messaging Hub in Africa, which is significant news for BlackBerry since Samsung is the top Android manufacturer in Africa.

A further partnership with Samsung could lead to new possibilities for BlackBerry, but what's in it for Samsung? The company earned $6.96 billion in profit, but warned that smartphone growth is slowing. The release of the Galaxy S4 and Galaxy Note 8.0 helped it to a 9% increase in revenue for the quarter.

Presently, Samsung has turned its attention to creating more innovative displays. This technology could give Samsung an edge over the competition if it is paired with BlackBerry's O/S. With the Department of Defense and other government agencies still preferring BlackBerry devices for their security, the company does have a small competitive edge.

Foolish final thoughts

Android's success is primarily due to its partnerships with other companies. If BlackBerry, Microsoft, and Samsung could work together to take on Android and iOS, they might be able to find success in a fiercely competitive market. In any case, it should be interesting to see what will happen with BlackBerry.

The tech world has been thrown into chaos as the biggest titans invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to dominate the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate and give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!

Stephanie Faris has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus