End may be near for BlackBerry

  @julpepitone July 1, 2013: 6:10 AM ET
blackberry crossroads

BlackBerry is at a crossroads.

NEW YORK (CNNMoney)

The death knells are sounding for BlackBerry.

"It is not the end / of the road for BlackBerry / but it may be close," wrote BGC analyst Colin Gilllis in a haiku to investors.

BlackBerry (BBRY) continues to struggle to sell phones. The former smartphone giant said Friday it shipped just 2.7 million BlackBerry 10 devices in its fiscal first quarter, and the company reported a surprise loss. Shares promptly lost nearly 30% of their value.

If the next few quarters echo this one, BlackBerry's dreams of once again becoming relevant in a market it once dominated will be destroyed. Over the past several years, BlackBerry's smartphone platform market share has been surpassed by Apple (AAPL, Fortune 500), Google (GOOG, Fortune 500) and even Microsoft (MSFT, Fortune 500).

"The [stock] drop of 30% after that report shows how desperate the situation has become," said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors. "The market is telling you there is something fundamentally wrong with the company and you need a major fix."

Sozzi thinks that move should be a sale of BlackBerry, or at least some of its assets.

Related story: You're going to love the BlackBerry Q10 (or hate it)

Despite its struggles in hardware, BlackBerry does possess other valuable resources that could make it attractive to potential buyers.

BlackBerry owns a trove of lucrative patents, which is a huge advantage in the competitive -- and litigious -- smartphone field. The company's several enterprise software solutions, including a newly announced security platform for iOS and Android, could be another strong source of revenue. And BlackBerry's reputation endures as a company that specializes in that strong mobile security.

It also has an impressive $3.1 billion in cash on hand.

That portfolio could be attractive to a big rival like Microsoft, Apple or Samsung.

"We believe BlackBerry's biggest assets remain in its patents and its cash," wrote Kevin Smithen, an analysts at Macquarie Capital, in a research note on Friday. "We think the likely end game for BlackBerry is a break-up for liquidation at a lower price."

BlackBerry declined to comment for this story, though CEO Thorsten Heins has repeatedly said that the company is constantly considering all of its strategic options -- even as it continues to pin hopes on its current strategy of wooing back customers with its improved smartphone lineup.

Yet some believe the end isn't quite as near as you'd think for BlackBerry.

The company as it stands now isn't a great fit for any one suitor, says Gartner analyst Carolina Milanesi. That could complicate a potential sale.

"I don't think owning the brand, or even owning the whole company, is something anyone would consider," said Milanesi. "I can see them picking and choosing. The BlackBerry brand itself isn't compelling at this point."

Even if BlackBerry tried and failed to find a buyer -- or refused to consider that option -- and the downward spiral continued, the company wouldn't disappear overnight. BlackBerry will certainly tap into its big cash hoard to continue marketing BlackBerry 10 devices.

"No matter what they do, the wrong move won't kill you overnight, and the right move won't save you overnight," Milanesi said. "It's going to be a long, drawn-out process." To top of page



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