Does BlackBerry have a future?

BlackBerry's announcement that it would be cutting 4,500 jobs unleashed a flurry of pessimistic speculation over the future of the beleaguered Waterloo, Ont., company, with some predicting it may simply cease to exist.

"Patient in intensive care, consider do not resuscitate order," wrote Iain Grant,an analyst with the Seaboard Group consulting firm,in an email toCBC News.

Felix Salmon, a financialblogger for Reuters, also put it bluntly:"They failed to win the smartphone wars, they have lost the smartphone wars and now they're toast. It's as simple as that,"he told CBC'sLang & O'LearyExchange.

Along with the announced round of cutsthat would eliminate 40 per cent of its staff, the company, which has struggled to compete against Apple and Samsung in the smartphone market,isexpected to post losses of nearly a billion dollars for its second-quarter earnings next Friday.

Although analystshad predictedrevenueat around $3 billion, many were surprised with thecompany's
projection of about $1.6 billion,with most of that blamed on the poor sales of its BlackBerryZ10.

"Thats disaster quality in terms of sales versusestimates," analystTroyCrandall of MacDougall, MacDougall & MacTier told CBC News. "Wed anticipated itwas going to be a bad quarter and maybe even below estimates, but not to this magnitude."

Late to market

Many analysts say the BlackBerry 10 series was alittle too late in response to a smartphone marketwhere many consumers have already placed their loyalty with other brands.

BlackBerryhas said it will change its focus, going from six to four handsets andfocusingon the enterprise andpro-sumermarket.

"I thinkthats aprecursorof getting out of the handset business entirely," telecom analystCarmi Levy told CBC News.

In future, Levy said, hesees a much smaller and leaner BlackBerry, focusing on a few key businesses, most likely software and services. Levy said the release this weekend of BlackBerry Messenger for Android and iOScould be a glimpse into the company's future.

"The company is going to undergo a rapid and radical downsizingandrestructuringwhetherit likes it or not. It has to if it wants to survive in some form," he said."As a full-line handset maker that competes against Apple and Googleand others, I think those days are over."

Cash value

While acknowledging the difficulties and challenges faced by BlackBerry, Crandall said the overall health of the companyis not entirely bleak.

"This isnt a Nortel situation. Nortel had debt. The good thing about BlackBerry, it has no debt and it actually has a fair amount of cash," he said, but added that it isburning through that cash quickly.

Cash on hand has fallen to $2.6 billion at the end of the second quarter, down from $3.1 billion in the previous quarter.

"Since ithas no debt, the company does have value. Just the cashalone the company has value. It still does have a business. Thats the big question mark. Whats the value of this business?"

While the value of the handset business continues to decline, the services business, which was a recurring revenue stream up until the release of the BlackBerry 10 operating system, still hasvalue, Crandall said.And in the last quarter, the company said it had 72 million subscribers.

BlackBerry also has patents, but those are difficult to value, Crandall said, because many companies already have the patents they need "to continue down the smartphone road."For example, Google bought Motorolato get its patents and Microsoft is tied up with Nokia.

They probably see [BlackBerry's patents] as a nice to have, not as a need.

Who would buy it?

Last month, the company announced its board has launched a formal review of its "strategic alternatives,"including the possibility of selling the smartphone company.But with all its troubles, it may have difficultiesattracting a buyer.

"Idon't thinkthere's a single potentialacquirer," Salmon, the Reuters blogger said."Who would want to throw good money after bad?"

"Would somebody be interested in still buying this company as a whole or would they be interested in buying it in parts,"Crandall said. "And I think were now at the stage where parts is probablythe direction in which this is going to go."

The patents could besold off separately in partial chunks, thenetwork could be sold off, BlackBerry Messenger could be spun off as a separate company, andlicensing the software may have some value, he said. But the hardware business has little value, he added.

Levy said everyone is nowwaiting for news of what happens next structurally.

"There'sa huge chunk of the story thats yet to be told, and there still a lot of investors who believethat even in a cut-up, partialform, theres value there. And theyll hang around."