Can BB Benefit From The WhatsApp Deal?

Facebook Inc’s awe-inspiring $19 billion bid for fast-growing mobile-messaging startup WhatsApp sent shares of BlackBerry Ltd surging after the closing bell as early as Wednesday, as investors were cheered by the lofty valuation for the messaging platform.

The deal sent shares in BlackBerry up as much as 9 percent in trading after the bell because it put a rough valuation metric around the smartphone maker’s own BlackBerry Messaging service.

BlackBerry Messaging, or BBM as it is more commonly known, was a pioneering mobile-messaging service, but its user base has failed to keep pace with that of WhatsApp, in part because BlackBerry had long refused to open the service to users on other platforms.

WhatsApp, with a user base of some 450 million, has grown rapidly. Its service works on Apple Inc’s iOS platform, Google Inc’s market-dominating Android operating system, along with devices powered by both the Windows and BlackBerry operating systems.

BBM remains popular, even though BlackBerry devices have waned in popularity. Late last year, the Waterloo, Ontario-based smartphone maker finally opened the messaging platform to users of iPhones and Android devices, and the service currently has over 80 million active users.

However, investors have attributed little value to the asset within the company. On Tuesday, Raymond James analyst Steven Li, in a note to clients, broke out a sum-of-parts valuation of the company and pegged the value of BBM at merely $240 million, or $3 per user.

Facebook’s valuation of WhatsApp translates into roughly $42 per user, and that could lead investors and analysts to rethink their valuation of the asset within BlackBerry.

BlackBerry has given no indication it is keen to sell the asset. While there has been some speculation that BlackBerry may seek to carve out the unit, or even sell it, the company’s new Chief Executive John Chen has so far said that BBM remains a core asset for the company.

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Is Iridium A Friend Of Cellular Phones?

Cellular phones squashed Iridium once, but in its second coming the satellite phone maker and owner of the biggest satellite fleet is relying on them to resurrect their business.

For all their seeming ubiquity, cellular services cover only about 8 percent of the globe, leaving large regions where the only way to communicate is to use a satphone made by Iridium Communications Inc or one of its smaller competitors.

“The need for communication devices and services where terrestrial can’t be there is rising, and as bandwidth needs increase it’s surely helping Iridium,” Macquarie Research analyst Amy Yong said.

Investors have taken notice, pushing up the stock of the company nearly 50 percent over the past eight months.

“It’s a different company, with a prudent and successful financial model,” Raymond James analyst Chris Quilty said.

“They’re growing, they have extraordinarily high barriers to entry and some of the end markets and applications they’re targeting are vast and untapped,” he said.

Unlike its competitors, Iridium’s satellite constellation covers the entire globe, including the poles, and its array of 66 satellites dwarfs the fleets of its rivals. Inmarsat Plc has 11; GlobalStar has eight and is aiming to have 32 in orbit by the year-end; Thuraya has three, with one planned.

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