UPDATE 1-BlackBerry shares up on interest from strategic buyers

Mon Oct 7, 2013 11:15am EDT

(adds analyst comments, background, share price)

TORONTO Oct 7 (Reuters) - Shares of BlackBerry Ltd rose 4 percent on Monday, following news of potential interest from strategic buyers in the embattled smartphone company and an analyst upgrade on the company's stock.

Shares in the company rose to $8 in morning trading on the Nasdaq, after a Reuters report late on Friday that the Waterloo, Ontario-based company is in talks with Cisco Systems, Google Inc and SAP about selling them all or parts of itself.

The potential interest from strategic buyers, along with the recent decline in BlackBerry's share price prompted Macquarie analyst Kevin Smithen to upgrade his rating on BlackBerry to "neutral" from "underperform."

Smithen, in a note to clients on Monday, said he believes the recent decline in the company's share price to well below Fairfax Financial Holdings' stalking horse bid price of $9, "has finally attracted enough interest from the global tech titans who may take a 'punt' on enterprise mobility."

Sources also told Reuters that BlackBerry is seeking preliminary expressions of interest from other potential strategic buyers, which include Intel Corp and Asian technology companies LG and Samsung, by early this week.

It was unclear which parties will bid, if any. But the sources said potential technology buyers have been especially interested in BlackBerry's secure server network and patent portfolio, although doubts about the assets' value remain an issue.

Smithen advised clients to hold on to the stock until a deal is concluded, noting that the company's intellectual property, its secure network and its service contracts, could be of value to rivals and software companies that have so far struggled to break into enterprise mobility market.

"We believe a $6 to $9 sale price range by year end to perhaps a consortium of buyers is the most likely outcome," he said.

Shares in BlackBerry, which closed on the Nasdaq at $7.69 on Friday, were trading at $8 at 10:30 a.m. EDT (1430 GMT) on Monday. Its Toronto-listed shares were up 4.6 percent at C$8.24.

In a separate note, Jefferies analyst Peter Misek, said he believes BlackBerry could be sold in three pieces with its new BlackBerry 10 operating system and handset business attracting interest from an Asian handset makers like ZTE or Lenovo.

Misek believes the company's BlackBerry Messenger platform could attract interest from the likes of Google or Yahoo , while its core enterprise business and network assets could get scooped up by the likes of Cisco, IBM Corp, Hewlett-Packard Co, or Oracle Corp. (Reporting by Euan Rocha; Editing by Chizu Nomiyama and Leslie Gevirtz)

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