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BlackBerry Buyout: A Big Waste of Time and Money

BlackBerry (BBRY) stock rallied at Monday’s open on yet another report of a buyout plan, spearheaded by Canadian investor Prem Watsa — with the backing from pension funds — for a bid for the embattled tech stock.

It’s all well and good to be patriotic and hope your home-grown smartphone stock remains a player in the marketplace, Prem … but don’t be naive. A BlackBerry buyout — particularly one that is designed to turn around BBRY instead of selling the company for parts — is an ill-advised venture doomed for failure.

You see, BlackBerry isn’t plagued by shareholders or the fact that it’s a publicly traded stock. If anything, BBRY investors have been remarkably patient with CEO Thorstein Heins and with the so-called reinvention of the company this year, which has seen the Z10 and Q10 lines flop … hard.

BlackBerry is forecasting another loss for the current quarter, and analysts expect red for BBRY’s full fiscal year — and if the company continues to miss expectations, it could find itself bleeding cash well into fiscal 2015, too.

The reason is that BBRY has fallen behind — both in brand appeal as the Apple (AAPL) iPhone and smartphones powered by Google (GOOG) Android have caught on with consumers, as well as in the innovation race.

Consider that BlackBerry CEO Heins called tablets like the iPad nothing more than short-lived fads. And he said this just a few months ago!

Consider that BlackBerry considered its Q10 a no-brainer hit because it’s one of the few keyboard-equipped smartphones out there … but initial reports indicate anemic demand. So much for a slam dunk!

Consider the BlackBerry Z10 debut flopped hard, resulting in a surprise quarterly loss.

Do all these events sound like something that’s the fault of a fickle shareholder base or undue scrutiny from analysts? No. These are the problems of a company with a poor strategy in a digital age.

And a BlackBerry buyout spearheaded by Watsa won’t change that.

BBRY is still doomed, either as a private stock or as a private enterprise.

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Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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  • Chad

    I’m wonder why a lot of analysists hate BBRY, the company has zero debt and good potential and way better than other telecome companies.

  • Frank Cout

    Do you have anything to disclose here ? Maybe a short position or friends with some…..

  • Kurt Windibank

    Another short sighted analysis. Blackberry is on the cutting edge of M2M with its QNX embedded OS being put everywhere. Its not all about hardweare sales. Hardware sales are a cut throat business with Amazon pondering giving devices away for free. BlackBerry is shifting Focus to facilitating M2M communication on all platforms through QNX (with OTA update capability) BES 10 cross platform managing all devices, Software solutions like backend processing of NFC payments and lets not forget they OWN ECC encryption through Certicom. You are Naive to second guess Blackberry transformation and even more naive to second guess Prem watsa.

  • Kurt Windibank

    Also…your analysis provides no new insights…just same old shite that gets shoveled around.

  • http://charlessizemore.com/ Charles Lewis Sizemore, CFA

    Prem Watsa is one of the best in the business…so I’m left scratching my head here. I’m not sure what he hopes to accomplish other than a slow bleed of cash for his investors.

    • Chad

      I think he know the market more than you

    • jonez

      Are you the author of this article? Did you not just see the crap Apple came out with. Is that why you’re mad?

    • charlie2010

      Watsa typically has 4 year investment timelines…..in three years bb10 will be a mature product with enterprise bes10 fully rolled out….and they will be competing with 10 year old dinosaurs, sounds like he’s timing it just right to me, short sighted traders can’t appreciate the genius of these long term investors.

  • annakevin22

    Pennystockchief dotcom (Dot means .), has helped me make better decisions on MSFT stock

  • WalterB

    Hum, you may be correct, or way off?
    Let’s review a fee points:
    1. This billionaire owes 10% of the company so far
    2. This billionaire is a very smart successful investor
    3. The BlackBerry phones are the best phones on the market
    4. Holding the phones back from their expected sales target is public perception, certainly not these amazing phones! They are currently selling about 65% of expectation targets.
    5. The new BlackBerry 10 software is still new and evolving quickly. 10.2 is around the corner.
    6. The new BlackBerry 10 phones have not started integration to all the QNX stuff on the market, yet! Huge new capabilities!!
    7. The new BlackBerry 10 phones are still rolling out across the world.
    8 the BlackBerry stock is seriously undervalued.
    9. The company is in a major reorganization making it much more
    Efficient and scaled to their actual sales.
    10. BlackBerry is in a strong financial position.

    Hum, after careful consideration of your article, I’m thinking Mr Watsa is on to something????

  • Jack

    Apple just came out with colored cheap phones! Bye bye BlackBerry…NOT! So glad I trashed my iPhone for a Q10, I can’t even begin to tell ya. Hey…did Apple’s stock take a hit after a product release day? And a good day for the market to boot?! But how?!

    That golden phone looks sweet! I wonder if you have to double pump the heck out of that one also?

  • charlie2010

    re: and if the company continues to miss expectations, it could find itself bleeding cash well into fiscal 2015, too.
    At the rate they are losing money they can only survive another 15 years, hope they figure out how to turn it around by then, oh I forgot, sales are already increasing……brilliant analysis.
    The previous quarterly results were in line with expectations, the media like to say it isn’t in line with their own expectations….even though they hadn’t any before saying they missed them.

  • HollyBolly

    This person is dillusional…lol. This isn’t news, this is pure venom speaking through him. Obviously lost money on BlackBerry in the past and now just spews hatred.
    It’s not about the phone, it’s about the OS, M2M, IoT. It’s not about pretty colours of cheap plastic, but about assisting human kind in taking the next step forward to the next generation of the internet.
    Do you DD and don’t be a naive child, spewing hate…grow up!