What Is BlackBerry Really Worth?

Consumer Electronics

Published: September 30, 2013 11:00 am

Last Updated: April 28, 2020 9:48 am

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

The $4.7 billion offer from Fairfax Financial Holdings for smartphone maker BlackBerry Ltd. (NASDAQ: BBRY) was viewed almost immediately by investors as too high. The day the offer was made, the stock fell below the $9 per share offering price and it has not looked back.

Investment firm Canaccord Genuity said on Sunday in its daily letter to clients that it believes BlackBerry will “ultimately end up selling the company due to the difficult competitive smartphone market and low probability BlackBerry 10 can return BlackBerry to sustained profitability even with the large planned cost reduction plans.” The firm maintained its Hold rating on the stock but lowered its price target to $7.

BlackBerry’s consumer business has no long-term value, according to the analysts at Canaccord Genuity, now that management has dropped its consumer-focused products. That is a double loser, given the trend among companies to let employees use their own phones for business purposes. If consumers do not buy BlackBerry phones and businesses no longer force employees to use the phones, there are few sales opportunities left.

The analysts at Canaccord Genuity now value BlackBerry’s intellectual property at $1.5 billion, substantially below the $3.5 billion valuation BlackBerry assigns to the patents. The battle between Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) over patent portfolios was largely a draw following Apple’s acquisition of Nortel’s patents and Google’s purchase of Motorola Mobility.

The analysts also valued BlackBerry’s $2.6 billion in cash at a much lower total of $1.0 billion, based on possible future inventory write-downs, more severance payments and large off-balance sheet commitments.

On a sum-of-the-parts basis, Canaccord Genuity values BlackBerry at $3.75 billion, comprised of $1.25 billion for its enterprise subscriber base, $1.00 billion for net cash and $1.50 billion for its patent portfolio.

Expecting Fairfax — or any other buyer — to pay more is a fantasy. One is only left to wonder why Canaccord did not rate the stock at Sell instead of leaving it at a Hold.

BlackBerry’s shares are down 0.3% Monday morning, at $8.01 in a 52-week range of $7.27 to $18.32.

Credit Card Companies Are Doing Something Nuts

Credit card companies are at war. The biggest issuers are handing out free rewards and benefits to win the best customers.

It’s possible to find cards paying unlimited 1.5%, 2%, and even more today. That’s free money for qualified borrowers, and the type of thing that would be crazy to pass up. Those rewards can add up to thousands of dollars every year in free money, and include other benefits as well.

We’ve assembled some of the best credit cards for users today. Don’t miss these offers because they won’t be this good forever.

Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.