Why the MobileIron IPO is good news for BlackBerry

By Chris Lau for Kapitall

BlackBerry ( BBRY ), as all investors know, is not the company it once was. The smartphone maker lost market share year after year since Apple ( AAPL) introduced the iPhone. Then manufacturers brought the Android to market, and BlackBerry’s slippery slope became an inexorable downward slide. Quarter after quarter, BlackBerry lost market share in the smartphone market.

Despite the dire story of Blackberry’s past, the IPO of Blackberry competitor MobileIron (its ticker will be MOBL) will validate BlackBerry’s transition as an MDM (mobile device management) play. Here’s why.

MDM valuation

MobileIron plans to sell 11.1 million shares for up to $111 million. This values the firm at a market capitalization of close to $700 million. The company hopes investors will pay over six times sales with a share price of between $8 and $10.

Good Technology also plans to have an IPO, but its billings growth is much weaker than that of MobileIron. Good Technology grew sales but experienced a 2% decline in billings in Q1.

BlackBerry crosses 1 million

The IPOs are good news for BlackBerry, because the company recently said it issued over 1 million EZ Pass BES 10 Licenses. BlackBerry boasted that it has more EMM (enterprise mobile management) customers than all of its top competitors combined. At a closing price of $7.60, BlackBerry’s market cap is around $4 billion.

Investors should also remember that VMWare ( VMW) entered the MDM market after it acquired AirWatch earlier this year. VMWare paid $1.54 billion for AirWatch.

Bottom Line

Demand in MobileIron’s IPO could signal higher valuations for BlackBerry in the future. There is a risk that the IPO is a bust, but this is still good for BlackBerry. BlackBerry could acquire it, further boosting its market share in the MDM market in the process. Security and the ease of managing mobile devices regardless of their platform are two IT functions that will only grow in importance.

Disclosure: Author is long BlackBerry

Do you think Blackberry is moving into new and disruptive markets? Use the links below to start your own research.

 

1. Apple Inc. ( AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, and software, services, and peripherals. Market cap at $472.72B, most recent closing price at $527.55.

 

2. Research In Motion Limited ( BBRY, Earnings, Analysts, Financials): provides wireless communications solutions worldwide. Market cap at $5.15B, most recent closing price at $9.83.

 

3. VMware, Inc. ( VMW, Earnings, Analysts, Financials): Provides virtualization and virtualization-based cloud infrastructure solutions primarily in the United States. Market cap at $41.58B, most recent closing price at $96.69.

 

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.

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