Here's Why Samsung Acquiring Blackberry 'Makes Strategic Sense'

The Street was buzzing with rumors on Wednesday of Samsung having talks with BlackBerry Ltd BBRY for a possible acquisition. However, both Samsung and Blackberry issued statements shortly stating that no such talks were talking place.

Ashok Kumar, analyst at Imperial Capital LLC, was on Bloomberg to Thursday to discuss why Samsung acquiring Blackberry makes sense.

“It does make strategic sense because Blackberry on a standalone basis faces a long road to potential recovery in generating operating profits or sustained profits, we are forecasting a continued operating loss for fiscal ‘16 as the steep declines in the high margins service revenue is only partially offset by software sales,” Kumar said. “So, from a strategic perspective it does make sense, but the official statement from Blackberry is that they are not engaged with Samsung on any proposed takeover offer for the company.”

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“No, I think it might be mincing words on both sides, it does make sense because Blackberry’s prospects as a standalone company are questionable,” Kumar said. The longer term turnaround strategy hinges on the ability for them to penetrate the Android and iOS in a platform with a secure workspace which right now only targets a niche in a Blackberry ecosystem and that’s unclear and it’s also likely that the company will fall short of its $500 million revenue sales target for the software business for fiscal ’16.”

He continued, “ So, all in all I think, there are synergies on a pure technical perspective and in order to put it in a broader perspective, if you look at the market for IP, Intellectual property…I think the options for Blackberry are limited from that perspective.”