What Should Apple Do With Its Cash? Buy BlackBerry

By Sean Udall  MAY 01, 2013 2:48 PM

The next generation of tech products should combine the two companies' best attributes.

 


The more I look at the evolution of the smartphone space and what will surely be a highly disruptive (and awesome) wearable entry in Google (NASDAQ:GOOG) Glass, the more I think a simply brilliant move by Apple (NASDAQ:AAPL) would be to buy BlackBerry (NASDAQ:BBRY).

This would create a nearly unassailable device entry in the enterprise segment: Apple's ease of use with Blackberry's security.

Now, the minute I saw Google Glass, I loved it, and I predicted that it would be huge, while most others were skeptical, if not outright negative. In fact, now I'm nearly convinced that this will be the next huge consumer tech product and category.

But here's the rub: How does Google Glass and all the data that is going to flow through the product stay secure? Sure, there are plenty of ways, but the enterprise customer is never the early adopter. In fact, many times enterprise buyers are the last to arrive following a huge consumer wave. After all, it took nearly two years before most companies completely gave up and joined the Bring Your Own Device (BYOD) craze, which Apple iPhones and iPads ushered in. And, really, the iPad was the key device in turning the tide.

Thus, if Apple were to combine iPhone/iPad products with the vaunted RIM -- oh, I mean BlackBerry -- security, they would secure an already steady revenue stream and possibly even grow it. This would then buy them time to bring forth their next slate of iSomethings for consumer and enterprise use. Then, whatever huge amounts of future data/bandwidth was generated would already be riding on the highly secure network and deemed safe for enterprise users.

Now do I think this is probable? Not at all. But I do think that it's possible and as stated above, I think this would be a master stroke for Apple.

Deparment of Justice concerns? None, as Apple doesn't even have 50% of US market share anymore.

Canadian government concerns? I don't think so since Apple is a US company, and it already has customer service call centers in Canada. Also, Apple could easily agree to keep the BlackBerry workers, R&D, and facilities in Canada.

Too high a deal price? Here again, I think Apple would have a huge advantage. First, the company could offer a lower price than most others and grant BlackBerry employees Apple stock options at a much cheaper price now that the stock has come down so much. Also, Apple can easily afford to pay a deal price that most other companies would balk at. In fact, Apple could pay a 70-80% premium, or a $13.5-14.0 billion market cap, and hardly dent its own balance sheet!

Bottom line: The more I look, the more I think this deal would be insanely great!

Also see:

Google Has Destroyed Apple's Walled Garden From Within

Should Apple Be More Worried About Samsung or Google?

Don't Stop Believing in US Equities: This Time Might Be Different


Twitter: @UdallTechStrat

This story is an excerpt from Sean's TechStrat Report, a tech focused newsletter. Take a free trial!



Disclosure: Minyanville Studios, a division of Minyanville Media, has a business relationship with BlackBerry.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.