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Microsoft Corporation (NASDAQ:MSFT), Not Apple Inc. In Line to Buy Blackberry Ltd.

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BlackBerry Ltd. (NASDAQ:BBRY) can’t thrive on its own, so say whispers around the market. The Canadian smartphone maker is on the shopping list of more than one Silicon Valley giant according to reports coming out of Asia.  Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) are said to be considering a purchase of the firm.  In light of rumors breaking Monday morning, Satya Nadella’s company seems the most likely contender.

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The rumor states that Microsoft has brought in investment banks to study the deal, a move that signals intent to purchase. Just weeks ago Tim Cook was rumored to be looking to buy BlackBerry. Those rumors caused a short-lived bump in the company’s share price.

Microsoft beats Apple to BlackBerry

Microsoft could gain from a Blackberry buy in many ways. The company’s enterprise security software could attract business customers, its solid hardware name could beef up Redmond’s own phone offerings, and its BBM messaging service could get Microsoft into an enterprise-facing social world. In spite of those theories, it’s not clear what Redmond would be most interested in.

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The Microsoft deal will total around $7 billion according to a Malaysia Digest story doing the rounds on Monday. The market values the company at $5.55 billion.

The reports should be taken with a pinch of salt. Many companies, including Apple, have been linked with a bid for Blackberry. The Waterloo company remains in the hands of shareholders in spite of those rumors.

Microsoft is not may not offer much of a premium in merger talks. The firm recently tried to buy salesforce.com inc. (NYSE:CRM). That deal failed because of a refusal to meet the price the board hoped for.

Microsoft offered $55 billion, but salesforce execs were looking for $70 billion according to CNBC. Issues over price could hit chances of a Blackberry deal. The $7 billion may not be up to Mr. Chen’s hopes and those of board members.

Blackberry up for sale?

Blackberry was up for sale in 2013, but none of the large US tech concerns were interested in the firm back then. CEO John Chen brought the Waterloo, Ontario company back to profitability in the last three months of 2014. That has made it a much more comely purchase for cash-rich companies like Apple and Microsoft.

Chinese companies, including Huawei, Lenovo and Xiaomi, are thought to be interested in Blackberry, but may be kept from bidding. Canada put a stop to a deal that would have seen Lenovo buy BlackBerry back in 2013 on security grounds. The Canadian government told Lenovo that it would stand in the way of any offer for the company.

BlackBerry phones remain common for government usage in the United States and Canada. That means purchase by a company from further afield would be subject to great scrutiny. A buyer from close to home, such as Apple or Microsoft, would likely be greeted by US agencies and the powers-that-be in Canada.

Meanwhile, in what the firm is calling the “next stage of the turnaround,” BlackBerry announced large lay-offs over the weekend. The firm’s cost-cutting plan has brought huge gains for shareholders in the last twelve months. Cost cuts may also make it more attractive to Microsoft, Apple, or any firm eyeing BlackBerry as a target.

In a report issued last week Wells Fargo said that a new share buy back made a sale less likely in the near future. Blackberry, say the analysts, “will likely look at other strategic alternatives.” Those include aiming for Android and iOS, selling parts of itself, and continued cost cutting.

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Paul Shea

1 Comments

  1. Makes sense. Since BB isn’t good with hardware but their software is the key, Microsoft would do well to buy it. Many government agencies use BB Server and other newer integration suites offered by BB so it would be a natural since Microsoft also rules the data centers.

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