BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is up for sale, but there is serious doubt about the value of the company to a prospective buyer. One of the company's most talked about assets, its patent portfolio, is seen as a probable motivator in the sale. The value of those patents may be overstated according to an AllThingsD article published this morning.
John Paczkowski valuating BlackBerry
John Paczkowski, relying on a Pacific Crest report, says that the value of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) assets may be undermined by existing cross licensing agreements. If that theory holds true, the multi-billion dollar estimated value of the company's patents may be much higher than the actual value of the asset.
James Faucette of Pacific Crest is of the opinion that much of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)'s patent portfolio has "been cross-licensed to other wireless companies" already. That means that those companies already have access to the company's patents, and they are nowhere near as valuable to a buyer as they might appear at first glance.
A second discounting factor, according to the report, is the amount of the company's patents that are legally designated as Standard Essential Patents, or SEPs. BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is legally obliged to license these patents at a reasonable rate. That means that SEPs are less valuable than other types of patent.
The value of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is likely to be a subject of much discussion until the company accepts an offer. Even after that happens, there may be trouble as was seen in the Dell Inc. (NASDAQ:DELL) buyout deal.
BlackBerry shares' trend
On this morning's market, shares in BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) were trending down. The stock stood at $10.26 per share at time of writing, down 2.39% in today's trading. In the five days the firm's shares have been volatile, stock is down more than 7% from close of market on Friday.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is a complicated company. There is no other large mobile company that operates along the same business model. That makes the company difficult to value particularly as the release of its new range of smartphones, on the BB10 platform, have underperformed expectations.
The firm's real assets, like its patent portfolio, may be what investors are really looking for from the company. John Paczkowski's piece demonstrates the difficulty in valuing that asset, and leaves the ultimate price of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) in more doubt than ever. Judging by the movement of the stock on today's market, that uncertainty is being met with pessimism by traders.