Let BlackBerry Go

Watching BlackBerry (NASDAQ: BBRY  ) stumble over the last few quarters has been a depressing sight, to say the least. Last quarter came in below expectations, and the company pre-announced a massive miss for the current quarter: $1.6 billion in expected sales against a sell-side consensus of $3.06 billion. As a result, the shares cratered before climbing back up slightly on the announcement that a consortium led by Prem Watsa's Fairfax Capital would be scooping up the company for $9 per share. Of course, the question on everyone's minds is whether it's worth speculating on a higher bid at this point?

BlackBerry's handset division seems largely worthless
BlackBerry has been evaluating "strategic alternatives" for several months now, and only after an abysmal quarter did an offer finally materialize. It doesn't seem as though buyers were exactly knocking on BlackBerry's door to pick up a business that is in very clear -- and apparently accelerating -- decline.

The problem here is that BlackBerry is very much a technology company playing in a very fiercely competitive industry. Apple (NASDAQ: AAPL  ) continually innovates across many sectors (software, hardware, and marketing) and the Google (NASDAQ: GOOG  ) Android ecosystem that helps to power competitors that are even giving Apple a margin headache certainly isn't sitting still (and some would even claim that even broader/deeper innovation is happening over there than at Apple).

I'd go so far as to claim that BlackBerry's handset division is worthless, something that even former BlackBerry bull, Peter Misek, now appears to believe. There's very little room in this market for yet another operating system, particularly as iOS and Android are very good platforms with excellent -- and growing -- suites of applications. Against many of the players in this space, BlackBerry has neither the scale nor the in-sourcing of critical components that tends to allow for good cost structures across the board. (Samsung is the master of this.)

How about enterprise services?
The only business that seems to be worth anything here is BlackBerry Enterprise Services. But even this business isn't exactly on the upswing, since BlackBerry's device market share, even in enterprise, continues to erode. That being said, the company recently announced that it would be offering its enterprise services on both Android and iOS via Secure Work Space. If BlackBerry can transform itself into a platform-agnostic services-oriented business, cut away most of the fat from its devices division (this might mean more layoffs), and essentially turn services into a cash-cow, then the Prem Watsa-led consortium might be getting a good deal.

What's the bottom line?
At the end of the day, I'm not expecting a higher bid from anybody else, which means that I'm not so confident that investors should be piling in on the hopes for one. The most likely case is that the deal just goes through, and if you buy today you're maybe looking at $0.20 per share in upside (and it'll be months before the deal actually closes). The best case is that somebody comes in with a higher bid, but it's unlikely. Just as equally unlikely is that the bid actually falls through, as Prem Watsa seems bent on saving this investment one way or another.

The BlackBerry saga is over, and the real takeaway here is that in the world of high-tech, consumer-oriented products, if you're not on the cutting-edge then you're not in the game. BlackBerry put up a good fight at the end of its life as a public company, but it was simply too little, too late, and the big boys are now going to try to milk it for all it's worth in the hopes of recouping what looks to be a very substantial and risky investment.

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