News outlets are suggesting that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is warming up to the idea of going private. While that may be so, many experts assign a low probability to this outcome given the transitional challenges to BB10 as sales have been weak (according to many), accelerating sub losses, increasing competition in the high end, and an eroding cash cushion ($3b) for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB).

BlackBerry Ltd BBRY Z10

Amitabh Passi and James F. Hillier of UBS do not sound too enthusiastic about the news. In a new report they note that  as they have written before, working capital (WC), which was a source of cash ahead of BB10, would turn to a use of cash as inventories ramp and write-downs follow.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) Software/Services strategy makes sense but it appears too late

UBS wrote ~2 years ago that the right strategy for BBRY was to focus on software and services, with an emphasis on MDM and porting its apps (email, calendar, messaging) to other platforms (iOS, Android). While BBRY is now headed in that direction, it seems late to us given the competitive MDM market. BBRY still has the adv. of an installed base it can leverage, but the cost of client retention will be high. UBS doesn’t think PE firms would be interested given the challenges facing the company.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) Alternative course is to monetize IP/assets

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) may be better off monetizing its IP/assets, and our best assessment has been that the IP is worth $1-2b. Add in cash of $2b (normalizing for some use) and other assets and they believe fair value is ~$10/share. The longer BBRY waits the more the cash cushion erodes. UBS is also seeing greater push form Apple (iOS 7) and Samsung (with KNOX) in enterprises, creating further challenges for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB).