Likelihood of BlackBerry split has analysts torn
TORONTO — Breaking up is easy to do in the technology world these days — with eBay and Hewlett- Packard moving to divide their companies amid speculation that Symantec is considering it as well. But despite previous speculation that BlackBerry had been headed for a split, analysts are torn on whether it is a likely option for the Canadian firm today.
Brian Colello, an equity analyst for Morningstar Securities in Chicago, said there is still the potential for the company, based in Waterloo, Ont., to hive off its recently formed unit for technology and intellectual property, or separate handsets from software and service.
“The company is still early enough in the ( post-restructuring) transition that they’re going to try and keep all of these businesses in- house. … Again, BlackBerry, with its relatively weak market position, it can’t rule out any of the possibilities of spinning out any of the businesses,” he said.
The latest technology firm said to be mulling a split is IT security firm Symantec, which is in advanced talks to create two separate entities: one that sells security programs and another that deals with data storage, Bloomberg News reported on Wednesday.
Also Wednesday, storage computer maker EMC got a public call in an open letter from activist shareholder Elliott Management to split off its software company, VMware.
This week, Hewlett- Packard confirmed that it would be carving its personal computer and printer business away from its corporate hardware and services business.
And in late September, eBay said it would separate its ecommerce business from its PayPal digital- payments business by 2015.
Although there has long been speculation about a split at both Symantec and HewlettPackard, analysts say the current industry climate may be pushing the companies to make the jump now.
The technology landscape has become more competitive, and smaller, nimble companies will be better positioned to adapt and generate improved earnings.
Despite the increased appetite in the market for breakups, it isn’t a viable option for BlackBerry, said Steven Li, senior vice- president and equity analyst at Raymond James Ltd. in Toronto. Selling or breaking off one of its units would weaken its current strategy of targeting enterprise clients with security from end to end, he said.
Susanto, however, said he couldn’t rule out the possibility of BlackBerry spinning off one of its units.
“But at the same time, I would emphasize that fundamental questions ( about the business) will remain and it will follow the business segments even in a post- spinoff period,” he said.