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What If Cisco Buys BlackBerry?

October 14, 2013 | About:
BlackBerry (NASDAQ:BBRY) had recently announced that it was thinking up strategies to bail itself out of the current financial crisis it is experiencing. These include going for joint ventures wherever and whenever possible, engaging in partnerships or outright selling the company.

The analysts had long predicted that this was coming for the company. Not too long ago after this announcement was made there were speculations about the giant tech companies like Google (GOOG), Cisco (NASDAQ:CSCO) and SAP (SAP) showing interest to either purchase BBRY in parts or outright or at least pull the company out of the financial crackdown via possible joint ventures.

Even if Cisco plans to buy BBRY, as it is already a giant in this industry, experts are trying to analyze a few points. They are trying to gauge whether at all CSCO has the resources to buy BBRY, if it is going to be a valuable purchase for CSCO and what the possible outcomes of this purchase would be.

Can Cisco Buy BlackBerry?[/b]

Cisco, the tech giant, is a major manufacturer and marketer of Internet Protocol-based equipment like switches and routes used commonly by professionals in big network corporations. The current size of the global networking equipment industry is around $50 billion in annual spending and Cisco is a major player in this industry. Given the fact that Cisco is a $125 billion enterprise having a cash balance of $50 billion in the bank, it will not at all be a problem for it to purchase BlackBerry. Having said that, it must also be mentioned that the company has a total debt valued at $16 billion on its balance sheet. Cisco has in the past acquired over 140 companies it considered strategic to its business drive in order to maintain its dominance in the market.

[b]Will Purchasing BlackBerry Be of Any Usefulness to Cisco?

Even when BlackBerry’s stocks have declined by 45%, one cannot presume that the company has lost all its usefulness. In fact there could be a fortune under the company’s surface. The assets of the company might still have a lot of value. The company which was once the proved producer of high-end mobile handsets has lost a considerable market share to competitors like Samsung and Apple Inc.. The messenger division of the company which it uses to unite customers, businesses and advertisers still has the capacity to generate over $1 billion in value for Cisco, at least in the initial stages. This apart, the IP portfolio of the company alone measures around $3 billion. The hardware section of BBRY is worth a whopping $2 billion as well. These assets might well cover up the cost of investment if Cisco purchases BBRY.

The acquisition might further boost Cisco’s passion for producing smartphones, just as early as last year when Cisco launched its android-based Cius tablets which didn’t last long because of serious competition in the market. Cisco being a leader in security technology, the patents of BlackBerry might prove useful and improve its dominance in the market.

How Will the Purchase Affect BlackBerry?

Should Cisco buy BlackBerry, the result would not be very good for the latter. BlackBerry might not be the gainer. It might rather end up losing as it may be restricted to the enterprise sphere, and Cisco might not choose to explore the potential in the smart devices division.

Should One Invest in BlackBerry Stocks?

It must be very clear to investors that if Cisco ultimately purchases BlackBerry, the return on investment might be brilliant, but it all depends on whether Cisco takes the move. Let’s just say it doesn’t. The investment may then depreciate as the stock may lose value eventually. It would be intelligent on the part of investors to wait and watch before making any move.

Rating: 2.3/5 (6 votes)


Batbeer2 premium member - 3 years ago
>> BlackBerry (BBRY) had recently announced that it was thinking up strategies to bail itself out of the current financial crisis it is experiencing.

When did BBRY announce it was "thinking up strategies to bail itself out of the current financial crisis"?

Last time I checked, BBRY had no debt and 2.5B worth of cash.

That's more cash than they had last year.

If that's what a financial crisis looks like, I want one.

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