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Wall Street Sees Value in RIM Services Over BlackBerry Handsets

Tickers in this article: AAPL BBRY GOOG MSFT

NEW YORK ( TheStreet) -- If BlackBerry has any remaining value after an unprecedented restructuring , the company's future lies far from its once-iconic handset brand.

BlackBerry's survival now hinges on earnings and cash flow from its mobile device management business, the company's corporate mobile IT services platform, and not its fast-declining smartphone handsets unit. That grim reality, while now apparent after BlackBerry said on Friday it would fire 40% of its workforce and quit the consumer smartphone market, could turn out to be the company's defining moment.

Unfortunately for BlackBerry employees and investors, the company entered the year with a completely different conception of how it would succeed in highly competitive smartphone and mobile device markets.

Nine months ago, BlackBerry changed its name from Research In Motion , in what the company said was a "defining moment" as it launched its BlackBerry 10 operating system and a new line of smartphones targeted at consumer markets dominated by Apple and Google . While that corporate rebranding may have had a strong marketing rationale, it also indicated that BlackBerry would throw everything it had at the consumer smartphone market, after years of sharp market share losses.

Less than one year later, all BlackBerry can show is billions of dollars in smartphone inventory writedowns , sharp losses and a set of businesses that may make the company unsellable to private equity or corporate buyers.

Put simply, few now see any value left in the BlackBerry smartphone. Peter Misek, a Jefferies analyst, ascribes a negative worth to BlackBerry's handset business - the brand that pioneered the commercial smartphone market and once made the company among the largest by market capitalization in North America.

Misek and other analysts, however, see value left in BlackBerry's IT services and enterprise-oriented business lines. After a weak reception for BlackBerry's newest Z10 and Q10 handsets and low overall uptake of its BB10 operating system, the company finally seems to be on the same page.

If BlackBerry can be sold or restructured into a more focused technology services specialist, Friday's layoffs could be seen as a painful bottom for the company as its top product became a commodity in the marketplace, a fate similar to the decline of Kodak camera film and AOL dial-up internet service. If BlackBerry's decline accelerates, its re-branding from RIM could wind up in corporate history books as a moment that defined the company's inability to change.

BlackBerry seems to have credible but slim prospects of a turnaround, however, time is now of the essence.

The company's mobile device management business continues to hold "substantial value" to equity investors or strategic corporate buyers, however, the declining markets share of BlackBerry's handset and mobile operating system creates a big headwind, according to Misek, the Jefferies analyst.