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Lenovo Exec Floats BlackBerry Buyout Trial Balloon

Lenovo Exec Floats BlackBerry Buyout Trial Balloon

Lenovo may be priming itself for a smartphone shopping spree, and BlackBerry could be on its list. That's according to recent comments from two top Lenovo executives, including what the CEO told a French newspaper this week. BlackBerry's rich history, patent portfolio and subscriber base are the components ripe for mining if Lenovo truly wants a deal -- and if BlackBerry's new Z10 is a dud with consumers.

By Rachelle Dragani E-Commerce Times ECT News Network
03/12/13 11:08 AM PT

Lenovo's CEO told a French newspaper this week that the computer maker would be open to exploring a BlackBerry buyout.

It is not the first time a Lenovo executive has publicly stated interest in the struggling smartphone company. In January, Chief Financial Officer Won Wai Ming said his company was exploring a variety of opportunities, including a BlackBerry buyout deal.

A BlackBerry deal could make sense, CEO Yang Yuanqing told the French financial newspaper Les Echos, but his company still needs to analyze the market and assess BlackBerry's place in it.

Lenovo has enjoyed relative success in the past few years in the global PC market, battling with HP for the third place spot among computer makers. With the overall market losing share to mobile devices, though, Lenovo has made it clear it wants to compete in the consumer device market on all fronts, which a BlackBerry acquisition could help it do.

BlackBerry's stock spiked about 14 percent after news of the report broke close to Monday's market close, but it dipped down again slightly on Tuesday morning to trade around US$14.50 per share.

Neither BlackBerry nor Lenovo responded to our request to comment for this story.

Looking for Options?

BlackBerry, formerly known as Research in Motion, was once a pioneer in the worldwide smartphone market thanks to its popular enterprise capabilities. The Canadian company has struggled since smartphones powered by iOS and Android have overtaken the market.

The company is hoping it can reverse that trend with its long-awaited BlackBerry Z10. The phone debuted in Canada earlier this year and is set to launch in the U.S. later this month.

BlackBerry's attempt at a turnaround, however, comes amid even more smartphone competition. Microsoft recently launched its Windows Phone platform, and HTC is also looking to reignite its fortunes with new products.

If the BlackBerry Z10 is not a hit with consumers, the company might need to consider a buyout, said Ben Bajarin, director and founder of Creative Strategies.

"I would say that if it looks like these new devices will not provide a turnaround, then it is time to seriously start looking at options," he told the E-Commerce Times.

A few comments to the press from Lenovo executives, however, is a far cry from a done deal, said Colin Gillis, analyst at BGC Partners.

"If I'm at Lenovo, it's my job to be looking at the landscape to see who I could acquire to bolster my business," he told the E-Commerce Times. "But if someone wants to acquire BlackBerry, do you do it now, while there's still an expectation that the Z10 platform might get some traction? I don't see anything happening anytime soon."

What's In It for a Buyer?

If BlackBerry does end up in play, and Lenovo is genuinely interested, the PC maker could gain a valuable acquisition, said Gillis. Its history in the smartphone industry has given it a rich patent portfolio, but there's more to be gained than just its intellectual property.

"BlackBerry is valued at around $7 billion right now, so you're probably looking at a deal close to $10 billion. That's a lot for just patents," he noted. "BlackBerry has 79 million subscribers, and a lot of people are eyeing those users who will need to be rotating to new phones."

Those subscribers, as well as BlackBerry's hardware and software systems, could certainly be beneficial for Lenovo if the time is right, said Bajarin.

"Lenovo is a strong player in mobile in China," he noted. "They have a great deal of opportunity to do so as well worldwide if they play their cards right. I don't think its the hardware they are after but rather the software. Lenovo could use the Blackberry operating system in a way to create their own proprietary ecosystem, owning the hardware, software, and some services."


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