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The 'Internet of Things' Increases BlackBerry's Appeal


BlackBerry could make for an interesting takeover target for any number of companies

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Following BlackBerry's (NASDAQ:BBRY) better-than-expected first-quarter earnings report, the regular takeover talk we used to hear about this company could start up again.

CEO John Chen just said on CNBC that the company is not for sale, but added that "everything is possible," implying that perhaps the Canadian government could accept a foreign buyer from the US or Asia.

The enterprise server business remains solid, and its smartphone unit may be approaching stability with a 23% quarter-over-quarter increase in unit sales. Some 2.6 million units were sold through to actual customers, and both earnings and revenues were above expectations. Net cash stands at about $1.7 billion, and the company expects to generate positive cash flow by the end of the fiscal year.

However, the kicker for an actual deal may be Project Ion, BlackBerry's name for its 'Internet of Things' initiative, which is based upon its QNX software platform. The goal is to build secure interfaces between devices and the cloud, which seems like a good area for BlackBerry to play in. The company's not great at building attention-grabbing consumer devices, but it is very experienced with mobile networks and security.

QNX is best known for its inclusion in automotive systems. In fact, Apple's (NASDAQ:AAPL) CarPlay system actually runs on top of QNX. Apple provides the interface to the user, but QNX is the underlying base.

The Internet of Things is hot right now. Google (NASDAQ:GOOG) bought Nest Labs for $3.2 billion; Apple is rolling out its HomeKit initiative with iOS; and Internet-enabled wearable fitness gadgets are selling like crazy. Countless other companies, including ARM Holdings (NASDAQ:ARMH), Intel (NASDAQ:INTC), and Microsoft (NASDAQ:MSFT) are also aggressively moving to capitalize on the connection of the Internet to, well, everything.

The reason I find the craze so fascinating is that it's unclear whether people will actually want everything in their lives connected to some type of data network. Techies act like this is a foregone conclusion, but when it comes to home basics, many people just want things to work.

Nonetheless, I think the Internet of Things craze will heat up big-time this year, if for no other reason that the smartphone and tablet industries have slowed and thus investors will be looking for new areas of secular growth. That should drive a lot of interest in BlackBerry as a possible acquisition target for any number of companies.

Twitter: @MichaelComeau

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