It has been reported that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is planning to spin off its BlackBerry Messengers (BBM) business as a separate company in an effort to revive its declining profitability. Is the idea of spinning off BBM attractive or pointless?
BlackBerry’s aim for BBM
Some observers in the technology industry suggest that the Canadian smartphone manufacturer aims to establish its BBM business as an attractive asset by making it a standalone entity.
Others opined that if the report is true that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will spin off its BBM business, it will be able to unlock a significant amount of value. Many consider BBM one of the positive assets of the Canadian smartphone manufacturer because it has 60 million users.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is expanding BBM by developing apps for Google Inc (NASDAQ:GOOG)’s Android operating system and Apple Inc. (NASDAQ:AAPL)’s iOS. BBM is expected to roll out on Android and iOS this summer. If the launching of BBM on Android and iOS becomes successful, it might motivate the management of BlackBerry to spin off the business.
According to Adrian Covert of CNN Money, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) denied the report that it is planning to spin off BBM. The company said it was a “complete rumor.”
BBM spinoff is pointless
Covert opined that the idea of a BBM spinoff is “completely pointless.” According to him, BBM was the best mobile messaging around, but that was five years ago, and that situation is no longer the same based on market share reports from IDC. He noted that the majority of BlackBerry smartphone users switched to other devices, therefore dumping BBM. Data from IDC showed that the BlackBerry OS market share in the second quarter was only 6.8%, a decline of 11.7% year-over-year.
He emphasized that there are already superior messaging alternatives that made BlackBerry Messenger largely irrelevant. Some of these superior alternatives include WhatsApp with 300 million active users, Microsoft Corporation (NASDAQ:MSFT)’s with 300 million connected users, and Apple Inc. (NASDAQ:AAPL)’s iMessage with 140 million users. Some of the less popular apps such as Line and Viper also have larger active users bases compared with BBM.
Covert added that Google Inc (NASDAQ:GOOG) has 425 active Gmail users integrated with hangout chat service, and Facebook Inc (NASDAQ:FB) has 53 million users using its messenger app.
“While Blackberry does plan to make its Messenger app available on iOS and Android, those apps have not yet surfaced. Every day that those apps go unreleased is another day BlackBerry loses ground to the competition. There was once a point when iPhone users were envious of BlackBerry Messenger. Not anymore. BlackBerry Messenger now just reminds us of how we all used to chat on our phones,” wrote Covert.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is exploring strategic alternatives such as taking the company private or a potential sale.
