Any potential bidder for BlackBerry Ltd. will have to put a value on each of the company's various parts. Here is a look at how several analysts are toting up the company's worth.
Cash – $2 to $6 per share
BlackBerry has managed to add to its cash stockpile in each of the last two quarters and now has $2.8-billion of cash and short-term investments on its balance sheet, equivalent to more than $5 per share. But how much will it have a year from now?
Kulbinder Garcha of Credit Suisse believes the company will burn through nearly $1.4-billion of its cash hoard in the next two years as it discounts its hardware to win over customers and faces continued headwinds in its service business. Nomura Securities analyst Stuart Jeffrey says since management "seems willing to utilize its cash to drive the business, we doubt that investors will factor in much of this cash" in assessing the value of the company.
Patents and intellectual property – $1.90 to $6 per share
Most estimates for BlackBerry's intellectual property range from $1-billion to $2-billion, or $1.90 to $3.80 per share. TD Securities' Scott Penner has previously suggested a $3 to $6 per share range based on how analysts are valuing the patents held by Nokia, but those estimates may be optimistic now that the buying frenzy for patents has died down. Michael Walkley of Canaccord Genuity, in estimating $1.25-billion, or $2.38 a share, notes that after Apple bought the majority of Nortel's patents and Google purchased Motorola Mobility, "patent valuations have returned to more normal levels."
Enterprise services business – $2 to $11 per share
Mark McKechnie of Evercore Partners puts only a modest value on the services business, which allows businesses to remotely control apps and security, assuming that margins will decline and the number of subscribers will fall by more than half. At an earnings multiple of 10, the business would then be worth just $2.32 per share to a potential buyer.
In contrast, Nomura's Mr. Jeffrey thinks there may be a possible upside even with a decline in service revenue. Assuming a profit margin double Mr. McKechnie's estimate and a 15 to 20 earnings multiple, he puts a price tag of $4.3-billion to $5.7-billion – or $8 to nearly $11 per share – on the services arm.
Hardware – Negative to $3.67 per share
TD's Mr. Penner says BlackBerry's hardware business is worth $3.67 a share, based on 0.2 times its next 12 months' revenue – a multiple that is similar to valuations of personal computer businesses at Dell, Lenovo and Hewlett-Packard Corp.
But many analysts assign it no value, and suggest management's desire to support the BlackBerry device business could eat into cash balances over the next two years. Steven Li of Raymond James, in his sum-of-the-parts valuation, assumes losses on the hardware business will offset the cash generated by the enterprise services business, so he assigns zero value to the combination of the two.
The sum of the parts – $6.86 to $13 a share
Mr. Penner and Gus Papageorgiou of Scotia Capital are among the more positive analysts. In addition to cash, enterprise service revenue and BlackBerry's own device business, Mr. Penner sees $2.28 per share in value for the company's opportunity in "BYOD" or management of "bring your own device" programs. For his part, Mr. Papageorgiou puts $10.16 of value just on the company's cash and patents.
In contrast, Mr. Garcha of Credit Suisse has a $9 target price, but he also performs a net asset value analysis that assumes BlackBerry will shut down the hardware business and operate only as a services business.
He pegs its value in that scenario at $6.86 per share, given severance costs and the settlements of various obligations.
To arrive at these ranges, The Globe and Mail solicited reports from the sell-side analysts who cover BlackBerry. Not all analysts responded, so the above numbers are not intended to portray the full range of analyst opinion.