Takeover, what takeover? Samsung and Blackberry (BBRY) are both shooting down a Reuters report saying Samsung offered to buy Blackberry for as much as $7.5 billion. The adamant denial putting to rest, for now, talks of a Samsung acquisition.
Yahoo Finance’s senior technology reporter, Aaron Pressman says Samsung is going through a rough patch. “Last year they lost market share. It seems their phones are getting crunched by cheap Chinese competition at the low end and Apple (AAPL) at the high end.” Samsung anticipates fourth-quarter earnings to show a 37% drop in profit from last year with sales down 12% over the same period. This would make the fifth straight quarter of decline for the South Korea firm.
Samsung’s dwindling smartphone sales have the company looking for new ways to generate revenue. “Blackberry has a more diversified business. They have this QNX operating system that people think is very valuable. They have a lot of patents. So maybe it’s a third way for Samsung to go,” says Pressman. Samsung wants to position themselves as a force in the “Internet of things” business- the process of connecting and syncing devices to each other.
Pressman thinks the timing doesn’t make sense for Blackberry to sell. “John Chen, the CEO is a turn-around expert and he seems to be getting things in order. He’s cut costs. He’s looking towards cash flow profitability shortly and they have some new handsets out. It seems like they have a lot of momentum and maybe they can make it on their own.”
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Blackberry has a renewed focus on its security software and the widely used QNX platform. QNX specializes in connecting devices and appliances. The software is used in everything from cars to surgical equipment.
Samsung’s also feeling the pinch from Xiaomi, China’s number one phone manufacturer. Xiaomi’s cheap phones and comparisons to Apple have helped the company capture top sales in China’s growing mobile industry. Today they introduced the Mi note which features a 5.7” screen. It’s similar to Apple’s iPhone 6 Plus, but only costs about half the price.
Pressman says the “Apple-esque” culture surrounding Xiaomi’s products could spell trouble for Samsung. “There’s a certain feeling around Xiaomi and their whole ecosystem. People buy into the ecosystem and they love the brand. They sell lots of other things online like apple. They are a real strong competitor. Samsung’s going to have their hands full trying to get back at that.”
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