Recently, there has been a lot of talk about how ridiculously cheap BlackBerry Ltd (NASDAQ:BBRY) is, even for a failing business and investors don’t realize the value of its Intellectual Property (IP) rights. In an interview on CNBC, Kulbinder Garcha, Credit Suisse’s managing director talked about how insignificant the value of these IP rights actually is.
“[…] The very simple way of looking at it when it comes to IP, I always look at it this way. BlackBerry Ltd (NASDAQ:BBRY) pays everybody, nobody pays them so if their patents really were this valuable and given how small their exposure is in the smart phone business why don’t they assert their IP against the world’s biggest smart phone vendors? […],” said Garcha.
BlackBerry Ltd (NASDAQ:BBRY) is scheduled to unveil its new phone, The Passport, on Wednesday this week, but that’s not the only thing that has brought the once prominent smart phone manufacturer into limelight. Its stock price has risen substantially from $5.75 in December last year to $10.93 at the closing bell yesterday. Garcha also addressed the question of BlackBerry Ltd (NASDAQ:BBRY)’s cheapness in a different light.
He mentioned that BlackBerry Ltd (NASDAQ:BBRY)’s ecosystem is sub-scale and poorly designed and the salvage value of the company, if it were to liquidate its balance sheet is $6 per share. That wouldn’t make the company very cheap at the level that it is trading at now. Furthermore, Garcha didn’t see the company’s recovery coming from either its hardware business or the security end. He thought both divisions faced monstrous challenges.
BlackBerry Ltd (NASDAQ:BBRY) currently has a $1.5 billion revenue stream from the carrier fees that it charges subscribers for the security it provides them in the form of compressed emails for example, according to Garcha. However, he thinks that it is going to half over the next year as most Fortune 1000 companies run their own security software now, and revenues from other BlackBerry Ltd (NASDAQ:BBRY) products cannot compensate for these lost sales.
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