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Lenovo (LNVGY.PK) can't afford to buy BlackBerry (BBRY -4%) even if it wanted to, argues Pac...

Lenovo (LNVGY.PK) can't afford to buy BlackBerry (BBRY -4%) even if it wanted to, argues Pac Crest's James Faucette, trying to cool off fresh speculation on the subject. BlackBerry's current market cap of $7.4B isn't far removed from Lenovo's $11.2B, he notes. Moreover, Lenovo has only $4.1B in cash, and the company would have to hold onto $2.4B of it to maintain its traditional minimum cash-to-sales ratio of 7%.
Comments (25)
  • Maybe Lenovo has a coupon?
    12 Mar 2013, 02:22 PM Reply Like
  • I saw it on Groupon. I bought one.
    12 Mar 2013, 03:28 PM Reply Like
  • ...I thoroughly enjoyed this coupon comment.

     

    Lenovo can't buy BB? But if all the bears are correct the value of this company and hence stock price is going to be drastically reduced very soon so Lenovo could buy BB then, right?

     

    I actually don't think BB or its shareholders want sell, the upside on their own w/ bb10 now or better yet w/ a partnership at the mid range is far too significant, and now much more possible, to give up.
    12 Mar 2013, 03:30 PM Reply Like
  • Pretty sure I made that argument first.
    12 Mar 2013, 02:23 PM Reply Like
  • I don't know if that's true Ashraf, but I certainly read yours first!
    13 Mar 2013, 07:32 AM Reply Like
  • ;)
    13 Mar 2013, 08:41 AM Reply Like
  • partnership not buyout.
    12 Mar 2013, 02:26 PM Reply Like
  • That is where they use borrowed funds. Bank of China has plenty to loan. Plus, didn't Tata Steel buy Corus Group several years ago. Corus Group was larger than Tata Steel. In fact, Corus Group was the third largest steelmaker in the world. Tata Steel was the 10th largest steelmaker.
    12 Mar 2013, 02:29 PM Reply Like
  • Considering BBRY prides itself on network security, I should think no chance of selling to a Chinese co....
    12 Mar 2013, 02:31 PM Reply Like
  • Correct. This and lawmakers are the only thing that will block a sale. But the argument that Lenovo can't buy (BBRY) because it doesn't have enough funds is a very poor argument. I guarantee that if Lenovo wants to buy, it will find the funds to do it.
    12 Mar 2013, 02:40 PM Reply Like
  • the deal would be licensing BB10 or a spin-off of the low end phone business, not a buyout even if it was leveraged.
    12 Mar 2013, 02:38 PM Reply Like
  • Bingo! Licensing makes much more sense and avoids some regulatory issues. The Canadian government does not seem too favorable towards Chinese buyouts.
    12 Mar 2013, 02:50 PM Reply Like
  • I have to agree. May be quite beneficial for both companies if BB licensed BB10. This would give Levono the opportunity to enter the mobile industry with the best mobile OS out. While helping BlackBerry further saturate the market with its BB10 software. But I prefer BB continue producing high end phones.
    13 Mar 2013, 06:24 AM Reply Like
  • Reminds me of Ferrari's reply to Ford when they wanted to buy the company and asked how much! Enzio's reply was "How much do you want for Ford"?

     

    Blackberry could buy Lenovo out of the shorts who are facing the problem of too few shares available to cover by doing a special issue.

     

    Imagine the potential sales of PC's running QNX as an operating system with a version of OS 10, 11 and 12.
    12 Mar 2013, 02:41 PM Reply Like
  • I can see James Faucette panicing and sh*tt*ng his pants yesterday and of course his highest priority in life is to throw out a comment trying to get the stock price back down
    12 Mar 2013, 03:09 PM Reply Like
  • Does it really matter who buys whom at the end.
    12 Mar 2013, 03:29 PM Reply Like
  • As has sort of been alluded to here, the discussion of whether Lenovo would or could buy BB is moot. The Canadian government would never allow such a sale. Would be considered a sensitive asset/industry and would block it at every opportunity.
    12 Mar 2013, 03:30 PM Reply Like
  • Isn't BBRY mkt cap something near 13 billions since it's traded on the NASDAQ and the TSE?
    12 Mar 2013, 03:30 PM Reply Like
  • Isn't BBRY's market cap supposed to be something near 13 billions since it's traded in the NASDAQ and on the TSE?
    12 Mar 2013, 03:31 PM Reply Like
  • Long on BB.

     

    The Canadian Government would never allow a Lenovo purchase - period.

     

    (Psst. The USA would never allow it either)

     

    ARGO The sequel

     

    Cheers,
    12 Mar 2013, 05:49 PM Reply Like
  • Blackberry's security - and the concept of security itself - don't seem to be as important to many these days.

     

    Government has diversified to some extent off the platform and they still have a couple of domestic manufacturers to secure products from (Motorola Apple...)

     

    What I find most interesting is how no one seems to care about security and the strength of the security in the BB platform anymore.

     

    No one honestly believes Android is secure I'm sure, and iOS just had a widely publicized security issue too
    http://engt.co/10N5z7O

     

    but somehow that isn't creating momentum behind Blackberry, I wonder why.
    13 Mar 2013, 11:40 AM Reply Like
  • @kmi it's simply the economics of it....if your employees are guying the phones they use for company business under BYOD, it makes it a lot cheaper for governments and companies to make the decision to allow their employees the choice of phone. Only the companies / governments with the most to protect will insist on Blackberry's high security phones.

     

    As more people / companies get hacked, the pendulum from BYOD will swing back the other way. Blackberry has to be sure they have the selection of phones out there for when that happens.
    13 Mar 2013, 12:06 PM Reply Like
  • Never happen below $25 and can they afford that amount for Blackberry? NO
    Blackberry could be at $25 soon, if, and only if, US Launch is strong, we will know within a month of launch.
    12 Mar 2013, 05:50 PM Reply Like
  • Folks,

     

    Of course Lenovo cannot buy POTUS's preferred communications system given the China bashing that is going on, and the actual spying/hacking. They can buy the hardware side of the business though (with an operating system license) and that would boost BBRY's stock price significantly.
    13 Mar 2013, 08:40 AM Reply Like
  • (BBRY) jumped today in the last half hour.
    13 Mar 2013, 08:58 PM Reply Like
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