BlackBerry Ltd (BBRY), Microsoft Corporation (MSFT): Huawei and Market Share

BlackBerry Ltd (NASDAQ:BBRY), in the wake of the major smartphone-market announcement this week that Microsoft Corporation (NASDAQ:MSFT) is initiating a $7.2 billion acquisition of Nokia Corporation (ADR) (NYSE:NOK), has now returned to the prominent limelight of acquisition rumors. BlackBerry has continued to lose market share in 2013, despite the launch of the BlackBerry 10 operating system and a new stable of smartphone devices. Last month, word got out that the board of directors at BlackBerry agreed to seek buyers for the company.

BlackBerry Ltd (BBRY), Microsoft Corporation (MSFT), Nokia Corporation (NOK)BlackBerry Ltd (BBRY): Huawei Out, but is Microsoft Corporation (MSFT) Still In?

In the first few days after the BlackBerry Ltd (NASDAQ:BBRY) sale announcement, a couple of pieces were written speculating about possible buyers for the Canadian tech company. Two of the more likely suitors mentioned were Chinese firm Huawei, which has been looking for better international market share in handsets, and Microsoft Corporation (NASDAQ:MSFT), which was building momentum with Windows Phone and may be looking to increase  penetration in the enterprise, where the Windows desktop OS and servers have been dominant. However, with Steve Ballmer pulling the trigger on the Nokia Corporation (ADR) (NYSE:NOK) deal – which brings Nokia CEO Stephen Elop back into the Microsoft fold where he left in 2010 to take over in Finland – it has seemed that Microsoft has dropped off the radar as a possible buyer for BlackBerry.

In a recent Reuters report,  a senior vice president at Huawei was quoted as saying that his company is not currently in the market for BlackBerry Ltd (NASDAQ:BBRY), which may be limiting the options for BlackBerry. Chen Lifang said that Huawei has not considered any acquisitions at this point, saying that “we want to rely on ourselves.” Huawei was previously considered a possible suitor for Nokia.

Though Microsoft made its play for Nokia, is it truly in lieu of BlackBerry Ltd (NASDAQ:BBRY)? At least one analyst says no, according to a piece on StreetInsider.com, which quotes Scott Penner of TD Securities as saying that Nokia and BlackBerry are apples-to-oranges companies and thus could both be acquisition targets for Redmond.

Penner wrote that “the argument for why Microsoft might want to acquire BlackBerry is mostly unchanged in our view … Microsoft still has ample cash resources (north of $70 billion) and could use BlackBerry to effectively double global smartphone market share and would provide better penetration with enterprises.”

Windows Phone Keeps Gaining, BlackBerry Keeps Fading

As Microsoft Corporation (NASDAQ:MSFT) decides on its next smartphone tactic, its Windows Phone operating system is continuing to make slow but measurable gains in the smartphone market, thanks to the latest market survey conducted by Kantar Worldpanel ComTech and reported by B2Bonline.com. Powered mostly by Nokia Corporation (ADR) (NYSE:NOK) Lumia handsets, Windows Phone improved to 3.5 percent of the U.S. smartphone market, up from 3 percent a year ago. Of the 5.5 percent of the market not controlled by Android of iOS, Windows Phone now takes up more than 60 percent of the market, while BlackBerry Ltd (NASDAQ:BBRY) has dropped from 1.9 percent in 2012 to 1 percent now in the overall market, or just 22 percent of the non-Android/iOS market share. By that math, Windows outpaces BlackBerry by 3 to 1 in the current market.

Do you still think that Microsoft Corporation (NASDAQ:MSFT) is in the market for BlackBerry Ltd (NASDAQ:BBRY)? If you were an investor in Microsoft stock, like fund managers Jeffrey Ubben or Jim Chanos, were you in support of the Nokia deal and would you encourage a BlackBerry buy? If you were a BlackBerry investor like fund managers Prem Watsa or Philippe Laffont, would you be happy with a Microsoft buyout of BlackBerry or would you rather see another company step up?

Disclosure: none

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