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BlackBerry shares rise as Microsoft-Nokia move sparks hope for deal

A Blackberry Z10 smartphone is held up in Pasadena, California July 8, 2013. REUTERS/Mario Anzuoni
A Blackberry Z10 smartphone is held up in Pasadena, California July 8, 2013. REUTERS/Mario Anzuoni

By Euan Rocha

TORONTO (Reuters) - Shares of struggling smartphone maker BlackBerry Ltd rose as much as 3.6 percent on Tuesday after Microsoft's move to acquire Nokia's handset business reignited investor optimism that BlackBerry too would find a buyer.

BlackBerry officially put itself on the block a few weeks ago in the face of lackluster sales for its new line of smartphones, and some analysts have been skeptical about whether it would be able to attract bidders as its business has shrunk.

But others argue that BlackBerry's pile of valuable patents and the well-regarded services business that powers its security-focused messaging system could be attractive to rivals or even private-equity players.

Shares of BlackBerry, which jumped as high as $10.48 early on Tuesday, were up 2.2 percent at $10.34 in midday trading on the Nasdaq, following the announcement of Microsoft's 5.44 billion euro ($7.2 billion) bid for Nokia.

Atlantic Equities analyst James Cordwell cautioned that it is hard to tell whether Microsoft's move will make others any more, or less interested in making a bid for BlackBerry.

"Nokia was already using the Microsoft's Windows platform, so integration-wise it is relatively straightforward," he said. "Whereas if anyone acquires BlackBerry, they will be acquiring it more for its network infrastructure and patent assets, as opposed to its handset business, so it will be a very differently driven deal."

BlackBerry, once a stock market darling, has bled market share to Apple Inc's iPhone and devices using Google Inc's Android operating system, and the line of smartphones powered by its new BlackBerry 10 operating system, has been slow to gain traction with consumers.

Waterloo, Ontario-based BlackBerry, which has more than $3 billion in cash and carries no debt, currently has a market capitalization of just $5 billion. Many investors remain convinced that it will be able to clinch a deal at a significant premium to its current value.

Fred Ketchen, the director of equity trading at ScotiaMcLeod, who holds shares in BlackBerry, said the Microsoft-Nokia deal has certainly boosted market speculation around interest in BlackBerry and mobile assets.

"I'm not sure if we're sitting at the brink of some kind of a big announcement to come anytime real soon, but in this game you never know," he said.

($1=0.7582 euros)

(Reporting by Euan Rocha and John Tilak; Editing by Jeffrey Hodgson and Peter Galloway)

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