What Is BlackBerry Really Worth?

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The $4.7 billion offer from Fairfax Financial Holdings for smartphone maker BlackBerry Ltd. (NASDAQ: BBRY) was viewed almost immediately by investors as too high. The day the offer was made, the stock fell below the $9 per share offering price and it has not looked back.

Investment firm Canaccord Genuity said on Sunday in its daily letter to clients that it believes BlackBerry will “ultimately end up selling the company due to the difficult competitive smartphone market and low probability BlackBerry 10 can return BlackBerry to sustained profitability even with the large planned cost reduction plans.” The firm maintained its Hold rating on the stock but lowered its price target to $7.

BlackBerry’s consumer business has no long-term value, according to the analysts at Canaccord Genuity, now that management has dropped its consumer-focused products. That is a double loser, given the trend among companies to let employees use their own phones for business purposes. If consumers do not buy BlackBerry phones and businesses no longer force employees to use the phones, there are few sales opportunities left.

The analysts at Canaccord Genuity now value BlackBerry’s intellectual property at $1.5 billion, substantially below the $3.5 billion valuation BlackBerry assigns to the patents. The battle between Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) over patent portfolios was largely a draw following Apple’s acquisition of Nortel’s patents and Google’s purchase of Motorola Mobility.

The analysts also valued BlackBerry’s $2.6 billion in cash at a much lower total of $1.0 billion, based on possible future inventory write-downs, more severance payments and large off-balance sheet commitments.

On a sum-of-the-parts basis, Canaccord Genuity values BlackBerry at $3.75 billion, comprised of $1.25 billion for its enterprise subscriber base, $1.00 billion for net cash and $1.50 billion for its patent portfolio.

Expecting Fairfax — or any other buyer — to pay more is a fantasy. One is only left to wonder why Canaccord did not rate the stock at Sell instead of leaving it at a Hold.

BlackBerry’s shares are down 0.3% Monday morning, at $8.01 in a 52-week range of $7.27 to $18.32.