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BlackBerry Ltd Climbs 30% On Samsung Electronics Takeover Report

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Do you remember those nifty phone devices when they came out, with cute little keyboards that let us get our email on the go as well? They once accounted for around half of all smartphones sold in the US, and maker BlackBerry (NASDAQ: BBRY.US) did well out of them with its shares peaking at around $140 in mid-2008.

But the technology has been eclipsed by the now-standard Apple iPhone/Android form factor, with bigger screens and on-screen keyboards, and BlackBerry sales have crashed — and the share price has gone with them, closing at just $9.60 on 13 January.

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Loyal users

BlackBerry devices do have a loyal, if relatively small, following, including US President Barack Obama. But even its latest offering, the $450 BlackBerry Classic focused on security and battery life, is unlikely to appeal to many outside the existing circle of aficionados.

It’s not surprising, then, that BlackBerry shares soared 30% on the claim that Korea’s Samsung has made an offer to buy out the company. A report by Reuters told us that Samsung has offered up to $7.5bn (approx £4.9bn), for a premium that could be as high as 60% on the previous close. The price responded on 14 January with a 30% hike, to finish the day at $12.60.

But it’s not a done deal, as BlackBerry has responded with denials saying “BlackBerry has not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry” and refusing to comment further. The share price fell back in after-hours trading in response.

Why?

But what would Samsung, the maker of top-selling Galaxy smartphones want with BlackBerry anyway?

Well, it’s not going to suddenly shift to keyboard-based designs again, so it’s got to be after BlackBerry’s patents — especially on technology covering security. With more and more governments trying to legislate rights to snoop on private and business data, it would be hard to convince the world that you’ve got encryption and security sewn up based solely on Google’s Android platform. And a takeover would remove a competitor from the market too.

But what should BlackBerry shareholders want now? It’s really hard to say.

Return to growth?

There’s still that core following, and chief executive John Chen has said he hopes the company can return to revenue growth by 2016 — although nobody is holding their breath on that one. It could take years before BlackBerry’s profits and outlook are sufficient to justify a 30% uptick in the share price, even if Barack Obama does love the things.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares in Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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