Seeking Alpha

Reuters: BlackBerry open to going private

  • Sources tell Reuters Thorsten Heins and BlackBerry's (BBRY) board are "increasingly coming around to the idea that taking BlackBerry private would give them breathing room to fix its problems." Michael Dell must be smiling somewhere.
  • The news service cautions BlackBerry "has not launched any kind of a sale process," and that getting financing could be tough. $3.1B of BlackBerry's $4.8B market cap is covered by cash/investments, but the company is also posting losses and hardly fits the profile of a traditional LBO target.
  • A source also states BlackBerry has talked to P-E firm/Michael Dell partner Silver Lake about "potential collaboration in enterprise computing." Those talks reportedly didn't involve "any buyout or other transaction-related discussions."
  • Shares could get a lift from the report, particularly given BlackBerry's still-heavy short interest.
Comments (48)
  • This could get very interesting, very interesting indeed...
    9 Aug 2013, 12:32 AM Reply Like
  • I still wonder if this is part of a pump & dump strategy?
    9 Aug 2013, 12:37 AM Reply Like
  • It just could be but why not get on the bandwagon for a quick buck? This could all be one big rumor but Reuters did report this first.

     

    -Cheers!
    9 Aug 2013, 02:13 AM Reply Like
  • Yes, pump-and-dump it is. A nice +9% profit in Europe this morning again. This dead cat bounces rather well.
    9 Aug 2013, 05:04 AM Reply Like
  • Jealous much?
    9 Aug 2013, 05:29 AM Reply Like
  • About two nice dead cat bounce profits in two weeks? I find Blackberry ping-pong most enjoyable and hope it will twitch a few more times before it dies for good.
    9 Aug 2013, 07:00 AM Reply Like
  • @system

     

    A bit of insight would show you just how wrong you are on this prediction. Good luck with your short positions, if you hold any.
    9 Aug 2013, 07:31 AM Reply Like
  • No. I'm just milking volatility. Benefit of trading in Europe. This dead cat is made from old rubber, so it may bounce a few more times : )

     

    Why should anyone want to buy Blackberry, when there's nothing worth buying? Even the brand name is stained with black mould.

     

    Dell, at least, has inventory that is usable and many customers. Blackberry has only some collectors of yesteryear tech as fanbase. Let's see how "happy" the DoD personnel are about having to use devices that have less functionality than previous models http://bit.ly/1crhPQ8 and http://bit.ly/1crhNI7
    9 Aug 2013, 08:58 AM Reply Like
  • The yesteryear tech fanbase supports Nokia nowadays, I believe.

     

    The point is that BES10 supports iOs and Android, if this is what your idea of more functionality is. The links are fine, Os 10.2 here in no time. Then we will see.
    9 Aug 2013, 10:47 AM Reply Like
  • Scuttlebut around the shop insiders say the offer price should be somewhere between $25 and $35!!! Watsa may be pushing for $40 so we may see something around the $33 price!

     

    And that's without the now imminent SHORT SQUEEZE!

     

    CANT WAIT TILL TOMORROW!
    9 Aug 2013, 01:22 AM Reply Like
  • 160M shares to be bought + those on the TSX. OUCH!?
    9 Aug 2013, 01:27 AM Reply Like
  • One assumes, Uncle, that you mean the barber shop. $40 is only if the Easter Bunny and the Tooth Fairy kick in.

     

    9 Aug 2013, 03:02 AM Reply Like
  • why would they have to pay so much? I don't understand the necessity of paying a 300% premium when 20% might be enough. Better to test that level and see if shareholders are willing to sell.
    9 Aug 2013, 04:28 AM Reply Like
  • Wish it would be that much but there is no real indication that there will be a deal done in the first place. I think $16-$19/share would make sense though
    9 Aug 2013, 07:51 AM Reply Like
  • There will be several bids. In Canada you require 90% of shares for ownership. Unlikely that happens, even at a 30% premium to book value. Then add in short covering.
    9 Aug 2013, 12:27 PM Reply Like
  • The short covering frenzy will happen. Not if, but when. Any acquiring company will pay book value + a significant control premium. Best of luck shorts!
    9 Aug 2013, 01:22 AM Reply Like
  • Perhaps BBRY will finally clobber the shorts?? Stay tuned. This MAY get brutal for the shorties.

     

    -Cheers.
    9 Aug 2013, 02:11 AM Reply Like
  • http://seekingalpha.co...

     

    hopefully!
    9 Aug 2013, 12:58 PM Reply Like
  • Yeh, positive news on the dod today...watch the roller coaster go now...
    9 Aug 2013, 01:24 AM Reply Like
  • Eid Gift? LOL

     

    early christmas

     

    Hope to see some fireworks soon...
    9 Aug 2013, 01:31 AM Reply Like
  • this is very very big news....I think this will significantly impact the stock tomorrow AM. can't wait!
    9 Aug 2013, 01:47 AM Reply Like
  • Yeah, anoher flash in the pan...t
    9 Aug 2013, 09:56 AM Reply Like
  • The breakup fee would be too large to really do a pump and dump here.
    9 Aug 2013, 02:35 AM Reply Like
  • What happens to my long call options if the company goes private?
    9 Aug 2013, 02:46 AM Reply Like
  • I was thinking a one time dividend of $1 or more would flush the shorts out but this is much better.
    Will see if there is any news out of Waterloo in the coming days. Also, tomorrow is short interest day so we'll see if the interest went up or not after the bloodbath.
    Going private would let BB brush off the made up news from the analysts finally who I'm sure are busy writing up "news" in preparation incase the rumours are true, something to the tune of "Gov't blocks LBO, revokes all BB operating licenses".

     

    I doubt an offer would exceed $20/share though, probably $18 max.
    9 Aug 2013, 03:43 AM Reply Like
  • I'd agree with that at the current PPS of <$10, but what about after the squeeze?
    9 Aug 2013, 06:26 AM Reply Like
  • I agree, a buyout for less than $20 is more realistic. The Dell buyout was for a little more than 2X cash and getting financing was easy for Dell because of Silver Lake.

     

    Financing this deal is going to be a lot harder, at 20 bucks a share they would have to get $11B to pull off this deal. I think one thing this rumor about going private tells you that perhaps companies like Lenovo, IBM or HP were not interested in BBRY.
    9 Aug 2013, 08:40 AM Reply Like
  • More accurately, Blackberry was not interested in Lenovo. Possibly IBM or HP makes sense.
    9 Aug 2013, 10:55 AM Reply Like
  • HP sauce has chosen the Android route.
    9 Aug 2013, 12:19 PM Reply Like
  • Dell buyout was for 2.23x book value. No way BlackBerry goes for less than book
    9 Aug 2013, 12:32 PM Reply Like
  • This will bring the spotlight back on blackberry. There has been no institutional buyers in this for a LONG time.... only retail punters. Given the dell situation(and a successful outcome), this may bring institutionals & hedgefunds back into the game. Ofcourse the short interest will make this extremely volatile, and somewhat a different situation than DELL..where at its peak.. only 72m shares were short out of a possible 1747m.. (4%).....

     

    Remember, bad fundamentals doesn't always mean a stock will go down. Yes we have cash burn, new product not going so well etc. But it doesnt mean that some value investors wont buy this as MONEY IS CHEAP.....
    9 Aug 2013, 03:50 AM Reply Like
  • Suppose there is a surge in price today. Should I still go fishing? Does one sell into this? I need about 12$ for break even. Will the value still be around on Mon.? Will Bb just make up a higher share price and keep it there? I gUess I'l find out when I get home.
    9 Aug 2013, 06:06 AM Reply Like
  • Eid Gift.... Awesome.. :)
    9 Aug 2013, 06:20 AM Reply Like
  • What is best strategy for bbry longs in this scenario...continue to hold or sell after price reaches $18...Thanks
    9 Aug 2013, 06:40 AM Reply Like
  • There are many variables to consider, (such as % of your portfolio, current allocation, investor objective etc).

     

    Also what is your sentiment on this stock? Do you believe it will hit $18 (I'm assuming your break-even)? What I suggest you do, to hedge yourself if you are still long. You could buy some puts (make the exercise date further out from when you anticipate to hit $18).

     

    If you cannot trade options. Maybe consider trimming some of your position with the recent surge. It really depends on your sentiment, your portfolio and many other factors. Don't get emotionally tied when investing. (It's hard, trust me I've been on the Apple Ride haha)
    9 Aug 2013, 09:14 AM Reply Like
  • Do not sell at $18. This is going more like $28.

     

    If there is ever a reason to buy on Margin, this is it. The most guaranteed buy I have seen in Decades!
    9 Aug 2013, 10:35 AM Reply Like
  • Uncle

     

    You remind me of a home team cheerleader when the score iss 44 (them) - 6 (you) and there are four minutes left in the game. There could be some wacky Back to the Future moment, but isn't that really just a movie?

     

    The device business loses money and the discounting on all of the new releases means margins have been sacrificed right now so it won't be even worse in 90 days when you'd sell these for $100 each in Tanzania (no offense, my friends). The lack of traction at retail for the platform probably means the future whatever-it-is is also destined for the dustbin before it even arrives at the distribution warehouse.

     

    So stop with the posturing about how well you might do in China or Mars. This will stop being a consumer company and people won't go to stores to buy them anymore. To a smart shopper, you probably won't want one now because there won't be apps for that again. There won't be a slot on the shelf for BBRY again - at least for a longish time.

     

    I like the security angle and that is the main salvageable asset here. Cut the junk, beef up the government/enterprise/... angles and figure out if it is a standalone company or sell it off for someone as a key subsidiary. That will take years and $$ and the kind of patience that PE managers have.

     

    They also have a sharp eye for profit as they have shareholders to answer to as well. In other words, they don't care if you bought in at $7 or ten times that. They will pay the least they can to make the deal fly.

     

    Last night you suggested $40. Today it is $28. I am sure in a week you will be closer to reality. I'll repeat what I said yesterday: if the offer ends in "-een, be happy."
    9 Aug 2013, 01:57 PM Reply Like
  • Is this just rumor? has tehre been any extra confirmation? Where hasd 40 $ Premium come from.
    9 Aug 2013, 07:53 AM Reply Like
  • (BBRY) shares could easily be up on improving fundamentals:
    1. DOD Win: http://t.co/7tFROgFwTb
    2. BB 10.2
    3. Z30/A10 5-inch high-end

     

    Rumors like this are baseless, but do highlight that shares are extremely undervalued. (BBRY) ought to go private, leverage its balance sheet to raise cash, and build its market share on its own schedule, not on wall streets quarterly one.
    9 Aug 2013, 08:10 AM Reply Like
  • They might as well go private. Nobody else would want this empty hulk of a company. Even the intellectual property rights, which are really the only assets worth anything, are valued less and less by the day.

     

    Okay... let the flaming begin. But 12-18 months from now I hope you'll also come back and say I was right.

     

    Disclosure - I have no position in BBRY
    9 Aug 2013, 08:30 AM Reply Like
  • The cash, the 70 million subscribers, the phones, the software. The board of people who dont throw good money after bad. The cost cutting, the third world success and potential outside the hollywood of cNBC. They are aware of these merits, and more, as they are the insiders.Writings here are full of idle speculation.
    9 Aug 2013, 10:36 AM Reply Like
  • vitriol like 'empty hulk of a company' make comments like yours, well, empty.
    9 Aug 2013, 10:57 AM Reply Like
  • Revenue is down a whopping 30% year-over-year, while the once-profitable BBRY now has an operating margin hundreds of millions of dollars in the red. Both management & the CEO are idiots and they don't even have a viable tablet product on the market after all these years.

     

    As a writer on CNN.com said recently, "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."

     

    I couldn't agree more. I stand by my previous comment. However, anyone who disagrees is free to catch a falling knife anytime they chose. It's a free country. There is always a chance I could be wrong. It's happened in the past. However, BBRY has crash and burn written all over it.
    9 Aug 2013, 02:40 PM Reply Like
  • wisPoker

     

    Visual to assist in your point.

     

    Homer Simpson either as a BBRY Long or as Slim Pickens in Dr. Strangelove (same result):

     

    http://bit.ly/19SHfp4
    9 Aug 2013, 03:06 PM Reply Like
  • Very appropriate. LOL
    9 Aug 2013, 03:58 PM Reply Like
  • If BBRY is going to get private, how does it works for my shares?
    will they be purchased by BBRY at the book or market value?
    Can you explain the possibilities, as I'm not an expert in this field.Thanks for your assistanceMaurice
    9 Aug 2013, 11:11 AM Reply Like
  • See http://bit.ly/15WQpze
    9 Aug 2013, 12:21 PM Reply Like
  • "empty hulk of a company"??
    Put aside hardware have you ever heard of QNX? ,BBM,BES10 and a company called Certicom (which has the patents to ECC)?.Do some research or shutup.
    9 Aug 2013, 11:33 AM Reply Like
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