Samsung is one of the most successful cellphone makers in the world, with high-tech gadgets sophisticated enough to equal -- or beat -- anything any rival has to offer. So why is the company reportedly interested in buying BlackBerry (BBRY), a company that's a shell of its former self, and one that's struggling in the back of the cellphone pack?
Two reasons: patents and security.
We're in a new world of security vulnerabilities. Hackers can take down Sony Pictures with a touch of a button, causing weeks of chaos because of a simple film. Web criminals routinely hammer away at corporate networks. And those networks become increasingly vulnerable as cellphones and other mobile devices are added.
BlackBerry has mobile security locked down better than just about anyone. That's why it's a favorite of the federal government and many corporations. Samsung devices largely run on Google's (GOOG) Android platform, which has been dogged by security concerns for years. Buying BlackBerry would go a long way toward fixing that. The companies are already halfway there, recently partnering on an initiative to integrate BlackBerry's encryption system into Samsung's Galaxy smartphones being used by businesses.
And then there's BlackBerry's vast library of 44,000 patents covering everything from, yes, security, to basic cellphone functions. Bloomberg News points out that BlackBerry's patents could give Samsung some relief in its long-running patent war with Apple (AAPL).
Samsung wants to buy BlackBerry for as much as $7.5 billion, Reuters reports. And while the deal is far from done -- in fact, both companies are denying it -- the news was enough to send BlackBerry shares soaring in Wednesday afternoon trading. The stock jumped nearly 30 percent to close at $12.60.
Selling to Samsung could be an easy and lucrative way out for John Chen, who has been working to turn BlackBerry around since he became CEO in late 2013. Last month, BlackBerry reported a small adjusted profit and positive cash flow.
The company's quarterly revenue came in far below analyst expectations, which was "not satisfying," Chen told analysts in a conference call. He added that revenue growth will take a while, probably at least a couple of quarters.
If nothing else, the report of a possible acquisition may serve to put BlackBerry and its security advantages back in the spotlight. That, combined with ongoing high-profile hacking attacks, will only help BlackBerry as Chen continues to work toward a turnaround.