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BlackBerry buyout unlikely

August 9, 2013: 1:45 PM ET

blackberry_business_problemsBlackBerry may soon learn that you can't always get what you want.

FORTUNE -- Smartphone maker BlackBerry Inc. (BBRY) is "open" to going private, according to Reuters. How delightful. In related news, my toddler is "open" to getting a pony for her next birthday.

On paper, a BlackBerry leveraged buyout does make sense. The company could be viewed as a bargain, given that its $4.8 billion market cap is a perverse rearrangement of the $84 billion it was valued at back in 2008 (and 19% lower than where it began the year). More importantly, it still has decent cash-flow ($630 million last quarter) and absolutely no debt.

Moreover, there is unlikely to be competition from strategic bidders. It's hard to imagine Silver Lake and Michael Dell would spend another $5 billion or so after having just been forced to stretch for Dell Inc. (DELL), while an Icahn-owned Dell would be more seller than buyer. China's Lenovo (LNVGY) or HTTC are always rumored to have interest, but it's hard to imagine such a deal flying with Canadian regulators (let alone what would happen to vendor agreements with U.S. government departments). There are arguments that companies like Apple (AAPL), Google (GOOG) or Microsoft (MSFT) may want select piece of BlackBerry -- such as its secured network assets or patents -- but being amenable to a take-private buyout is much different than enabling a strip sale.  And even at today's depressed valuation, BlackBerry's parts may be too rich for strategic interest.

So back to the buyout talk. Or lack thereof, since companies only leak such "openness" if no one is actively beating down their door.

The flip side of a bargain is a falling knife, and it's hard to imagine too many private equity firms wanting to put out their hands for a company that is descending at such terrifying velocity. Revenue is down a whopping 30% year-over-year, while the once-profitable company is now hundreds of millions of dollars in the red.

Today's BlackBerry is to companies like Apple and Samsung what Palm used to be to BlackBerry. That is to say it has become passé among consumers, seemingly regardless of product quality. Private equity firms are good at changing up management, massaging finances and growing sales of already-popular products. But not really at massive brand resuscitations.

Moreover, the universe of large private equity firms with deep tech expertise is fairly limited (just think of how few firms took a serious look at Dell).

So I'm sorry Emma, but no pony come November. But you won't be the only one not to get what you want...

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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