Not a bargain

BlackBerry buyout from Prem Watsa and Fairfax
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BlackBerry Stock NOT a Bargain after Buyout Fails and CEO is Fired

blackberry logo bbryBlackBerry (BBRY) has been doomed for some time, as has been written many times here and around the web. But now BBRY stock looks to be heading for failure sooner rather than later.

BlackBerry stock had one lifeline in a buyout bid from Canada investment icon Prem Watsa and his Fairfax Financial money management firm. Watsa’s BlackBerry buyout bid was $9, but the stock never even traded close to that mark despite the offer.

Now that BBRY bid has fallen apart completely, BlackBerry stock has crashed 16% to start the week. The fallen tech giant now trades for around $6.50 a share — down about 63% from its high of $18 earlier this year.

I Reiterate: BlackBerry is Doomed

This is not a story of consumer technology anymore, with the Apple (AAPL) iPhone or Google (GOOG) Android devices going head-to-head with BlackBerry for usability. This is not about who will be the viable number three either, and whether Microsoft (MSFT) and its Windows Phone can get into the enterprise space.

This is a story about a lack of trust, where consumers and businesses don’t think BlackBerry will be around to service devices going forward. And Wall Street is increasingly starting to think the same way.

Thankfully, BlackBerry has the cash cushion to avoid an imminent collapse caused by a confidence crisis … but make no mistake that the genie of “no confidence” has been released from the bottle, and putting it back in will be very difficult — if it’s even possible.

While I take no particular pleasure in being correct about the demise of BBRY stock, I have to point out yet again that I have been writing for some time that this BlackBerry buyout offer would never happen and that this tech giant would only go lower.

Now there is no more debate, as BlackBerry has announced it will receive a $1 billion investment via convertible bonds from Fairfax Financial Holdings but nothing deeper — other than, of course, the departure of Chief Executive Thorsten Heins who presided over this whole mess at BBRY.

BlackBerry buyout plans have officially been scrapped, and John S. Chen now has the ignominious privilege of leading BlackBerry’s board going forward.

I could go into more detail about why BBRY won’t turnaround and why nobody will buy this company at any price — how its $1.1 billion in cash will be bled down in a hurry amid huge operating losses, about how any suitors interested in part of BlackBerry would never be so foolish as to bid for the entirety, or how vulture investors can simply wait to pick the carcass clean since BlackBerry tomorrow is almost always worth less than BlackBerry today.

But just read the previous articles on BBRY for details. Because while this headline about a failed BlackBerry buyout is “new” … it’s predictable and doesn’t change the narrative one bit.

Don’t think this gives you the long-awaited bottoming in hopes of a white knight buyout. After all, BlackBerry’s big crash after Prem Watsa’s $9 per share offer should prove to you that some dragons are impossible to slay.

Avoid BBRY stock like the plague, as you should have been doing all along.

More on BlackBerry Stock and the Doomed Buyout

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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Comments
  • Hamasutra

    The board of Directors should all be fired. What good it this guy Prem Whatsa word, I thought that he said in an interview that the deal would not fall through and that they would most definately go through. They should of sold the complany off while it was doing well, I hope that the stock recovers as it is a good canadian company which had a bad outcome when they first started the touch screen smart phone deployment, it took some time to get where it is at now and with a good solid platform BB10 i hope that we dont have another Nortel deception