Here we are, three years later, and BlackBerry’s latest devices, more targeted at (imagine that) consumer interests versus work tools, have failed to draw much consumer interest outside of BlackBerry devotees. Shares are down nearly 39% from January’s high, and the company’s market share is lower than its been in almost a decade. On August 12, the company announced the formation of a special committee that would “explore strategic alternatives to enhance value and increase scale.”
Two wrongs make a right?
The acquisition of Nokia Corporation (ADR) (NYSE:NOK)’s handset business doesn’t, by any means, remove the possibility of Microsoft Corporation (NASDAQ:MSFT) buying BlackBerry. The company should still have around $70 billion in the bank after the Nokia Corporation (ADR) (NYSE:NOK) acquisition, so funding a deal isn’t an issue. The question, of course, is what would this bring to Microsoft Corporation (NASDAQ:MSFT)’s business? There are a couple of benefits:
- BlackBerry’s legacy of enterprise security is still valuable, and actually would pair well with Microsoft Corporation (NASDAQ:MSFT)’s strength in the enterprise.
- Combined with Nokia’s increasingly popular Lumia phones, Microsoft Corporation (NASDAQ:MSFT) could have a full suite of both consumer and enterprise products and “solutions.”
The real challenge would be integrating three very different companies together in a way that actually created value. Frankly, this is a tall order for any company to pull off. And I’m not convinced that Microsoft, with its history of poor acquisitions. The best (or worst) example of this is the $6.3 billion acquisition of aQuantive in 2007, that led to the company taking a $6.2 billion writedown last year.
And while it’s true that non-cash charges like this don’t directly hurt Microsoft’s operations, they are clear evidence that the company is just terrible at leveraging acquisitions. Chances are the Nokia acquisition will end up leading to more write downs in the future. BlackBerry would be more of the same.
Final thoughts
The move to buy Nokia’s handset business could eventually work out for Microsoft. However, history isn’t in Mr. Softy’s favor. A decision to acquire any or all of BlackBerry would just be piling on more confusion in the middle of the search for a CEO. BlackBerry investors could be facing their last real chance to get out with much of anything. The no debt, cash-rich balance sheet is a strength, but lack of profitability and product demand means the well will eventually run dry. Whether it’s Microsoft or another company, BlackBerry needs a suitor.
The article What Does the Microsoft-Nokia Deal Mean For BlackBerry? originally appeared on Fool.com is written by Jason Hall.
Jason Hall owns shares of Apple (NASDAQ:AAPL). The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft.
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