Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
Well, there goes any chance of 2015 being a year of “sanity” in the mobile telecom space. We couldn’t even get out of the first month without a couple of head-scratching rumors sprouting from the minds and mouths of “sources” looking to ensure that insanity has yet to lose its grip on the wireless space.
First, rumors this week began circulating that Samsung was interested in purchasing Canada’s BlackBerry for $7.5 billion. The deal would combine the world’s largest mobile handset maker with what at one point was the world’s dominant smartphone maker.
Both companies came out flatly denying such a deal was in the pipeline, which probably means it will be announced next week.
The rumored deal would seem to be a significant win for BlackBerry, which has been unable to right a ship that at one point was safely floating on bags of money.
And for Samsung, well it would provide it with access to an enterprise market that it seems to have been unable to open despite its persistent Knox. (See what I did there?) With smartphone rival Apple seemingly now the de facto device of choice for enterprises, (at least at the management level) what’s the harm in throwing off some of that refrigerator money in pursuit of its American foe?
Of course, the logic of such a deal would have to overlook the fact that BlackBerry’s future is likely to not ever hit the highs of its past, despite the wonderful attempts at nostalgia it throws into the market. BlackBerry’s one wildcard is its patent portfolio, which in this day and age is worth billions.
“I cannot comment on the reasonableness of Samsung’s offer, but if, as the article suggests, it was solely based on the patent portfolio, then I have to side with the board,” explained 451 Research SVP Wally Swain, in a research note.
Sure, the two companies do have some history together, but Samsung has not been a company to just throw money at telecom-related acquisitions. However, the thought of a Korean-Canadian combination does make this rumor at least tempting to contemplate.
Sprint to go shopping at RadioShack
While a Samsung-BlackBerry deal can be justified to some extent, this week’s other rumored deal is too insane for it not to happen.
Let me preface this by stating I believe most people who follow the wireless telecommunications industry, even on a very basic level, are aware of the operational “difficulties” Sprint has been dealing with over the past year or three. Well, similar operational challenges have also been faced by RadioShack, which at one point was a major distribution point for the domestic wireless market and has in recent years attempted to regain such recognition.
Operations have been so difficult for both entities that Sprint is having to slash its workforce and capital expenses in order to stay on the good side of its Softbank line of credit, while RadioShack is reportedly on the verge of filing for Chapter 11 bankruptcy protection. Thus, some form of combination of the two entities only makes sense.
The rumored deal has Sprint in talks to lease some of RadioShack’s retail locations that it could turn into Sprint stores, thus realizing Sprint CEO Marcelo Claure’s plans to expand the carrier’s market presence. Sure, Claure comes from a background of working with distributors and probably has a soft spot for the hard work those outlets have in presenting purchasing options for consumers. But, is a lack of retail presence really a way to solve Sprint’s current dilemma?
Sprint last week announced that it managed to attract nearly 1 million new customers to its network during the final three months of last year, a result that is double what the carrier managed to pull off the previous year, but some expressed concern over the cost of such growth.
As for RadioShack, which somehow was not able to turn around its operations by rebranding itself as “The Shack,” being able to offload any of its retail locations would seem to be a good move. The carrier last year announced plans to close more than 1,000 of its approximately 5,000 retail stores, with the latest news indicating it would like to shutter up to 2,000 more locations.
I am sure that RadioShack has at least some retail locations that are not buried deep into strip malls or at the farthest corners away from the food court at an indoor mall, but I have never seen one. And if it does, would they really want to offload those locations to Sprint?
Plus, aren’t there already enough brick-and-mortar retailers out there serving up mobile devices to make a carrier-based expansion an iffy proposition? Maybe Sprint is tired of sharing shelf space with its rivals as those sorts of comparisons could be highlighting potential inadequacies. But, I also have to admit that I don’t remember there being a mosh pit the last time I ventured into a Sprint-branded store.
Don’t get me wrong, I like this rumor. Anytime two struggling entities can get together in an attempt to solve their problems using the “two bad ideas make a right” equation, I am all for it. But, I gotta admit that, at least from the Sprint angle, this potential deal may need a quick re-think.
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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