BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is in the middle of evaluating viable options to take the company out of lows, which makes it difficult to aptly value the company. Analysts and industry experts are busy determining the value of BlackBerry’s enterprise services and its patent portfolio while viewing its smartphone business as “essentially worthless.
BlackBerry patent valuation
Previously, the patent portfolio of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) was estimated at 5,236 U.S. patents and roughly 3,730 active patent applications, which are worth $5 billion. However, Scotiabank analysts have suggested that value of patent portfolio is near about $2.25 billion. BlackBerry is sitting on a “patent goldmine” says a recent report from The Wall Street Journal.
“We have been suggesting a value of roughly $2.25B based on a discount to what was paid for the Nortel patents, given the sale of those patents occurred at a particularly opportune time,” Scotiabank analysts wrote.
Patents were sold off for around $1 million each, and a Motorola patent was sold for approximately $735k. BlackBerry maintains around 5,136 patents and to reach $2.25 billion value each patent should sell for $438K or a 40 percent discount to the Motorola patents, and an almost 60 percent discount to the Nortel patents, says analysts from Scotiabank.
Timing not favorable
According to the Journal, timing is not favorable for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) as when Nortel received enormous value for its patents the mobile industry was burdened with a series of patent litigation in 2011, and the companies, at that time, were ready to pay a huge sum. Now those patent wars have slowed down and companies are not much interested in buying patents.
However, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) still stands a fair chance, according to the report. Tom Gara from the Journal said that BlackBerry is sitting on a cash pile of $2.8 billion along with short term investments. The patent portfolio of this Waterloo, Ontario-based company is estimated at $2.5 billion, which could translate into easy money for investors, who are trying to take the company private. Gara also said that Scotiabank has calculated BlackBerry’s cash and patents alone to be worth $10.16 per share. Presently stocks of the Canadian firm are trading at $10.53.
BlackBerry could spinoff BlackBerry Messenger
Earlier it was reported that BlackBerry is considering separating its BlackBerry Messenger division into a separate company called “BBM Inc.” The new company will operate as a subsidiary to BlackBerry and will have greater power over its operations than now. Spinning off BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) Messenger into a new company is one amongst many strategic alternatives the company is considering.