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BlackBerry may be valued as if still smartphone king

Thursday, January 15, 2015 - 08:27
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Samsung Electronics Co. may be valuing BlackBerry Ltd. like it's still the leader in smartphones.

[NEW YORK] Samsung Electronics Co. may be valuing BlackBerry Ltd. like it's still the leader in smartphones.

The South Korean conglomerate approached Waterloo, Ontario- based BlackBerry with an initial takeover offer price of US$13.35 to US$15.49 a share, Reuters reported, citing an unidentified person and documents. At the high end, that would value BlackBerry at about US$7.1 billion after subtracting net cash, or 24 times its trailing 12-month earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. It would be Samsung's largest acquisition.

The last time investors assigned BlackBerry that rich of a valuation, its devices still controlled half the smartphone market and Apple Inc.'s iPhone had yet to outsell them. BlackBerry's market share has since shrunk to about 1 per cent.

"That's a lot of money for a company with about 1 percent market share in the US," Roger Entner, an analyst with Recon Analytics in Dedham, Massachusetts, said in a phone interview. "God bless them if they're getting that, but that's a lot of money for a company that's not going anywhere."

On a revenue basis, the potential offer is a multiple of 1.9, which BlackBerry shares haven't commanded since early 2011, data compiled by Bloomberg show.

BLOOMBERG