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Blackberry: Why the Shorts and Analysts Have it Wrong


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Citron looks at a $15 Target – Minimum



As a short seller, nothing creates a better investment opportunity than a heavily shorted stock based on a flawed thesis.  This creates unique trading opportunities that are relatively infrequent.  Citron thinks this unique circumstance now applies to Blackberry [formerly Research in Motion:  NASDAQ:BBRY) ].


Blackberry was such a ubiquitous handset brand just a few years ago, and fell off the radar so brutally, that short sellers have failed to realize that its identity no longer defines the company. Also, when seeking short sale opportunities, we always look for “bad” or “misguided” management.  If that is still your thesis with Blackberry, we suggest it is time to exit.


Let’s start here:  Blackberry completely blew a market leadership position, which it will never recover. They lost their dominant handset business, and had their lunch eaten by Apple and Google.  That was then.  Get over it. 

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  • 2 months later...

Good to hear! I am long blackberry since john chen joined.


I think their MDM revenue is not much yet. It's a new source of revenue - estimated at only 65m by Goldman's research (attached).


According to GS's sum-of-parts (attached), it's worth $8.60. However, they didn't count the MDM and QNX. I am not sure about MDM, but I know QNX is comparable to Wind Rivers Systems' vxWorks operating systems. Intel bought Wind Rivers Systems for $889mn in 2009.


They currently have 2.5+ billion cash. Sure, they got 1b+ debts. but it's only 5% interest and is not dilutive until Fairfax converts (when that happens, the stock will be a lot higher).

They could sell more assets like patents or BBM. Use that money to buy another company or get more revenue. They are on track to make their device division to stop draining cash by partnering with Foxconn.

Market cap is only 4.3bn.


They could also be bought too -- by, say SYMC. SYMC is dying due to PC. it will be great if SYMC can break into mobile security by buying BBRY.


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Thanks sleepydragon for the GS report. I am having a hard time with their assessment for couple of reason


1 - It's hard for me to put a 2.1B value on the patents. BBRY's patent's are only potentially valuable to a very small set of companies and as more time goes by, the value of these patents goes down.


2- It's ridiculous to compare WhatsApp valuations to BBM. First, they operate in completely different market segments. I use WhatsApp with lot of my friends on it. They probability of these folks switching to BBM is less than .001%. BBRY is so uncool in the consumer space. Also -- just because FaceBook shelled out 19B for WhatsApp doesn't mean that's the true market value and other companies would have paid the same. Facebook is just desperate right now as people are moving off to other solutions.


To me the hope for BBRY is in the MDM solution and QNZ software. However, MDM seems to be only 65M in revenue right now and I haven't taken the time to find QNZ numbers but suspect it's not huge.


Yes, I can come up with $4B value based on current situation but not too much higher unless a better picture emerges with MDM and QNZ solutions.


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i agree with you.

on the other hand, they are making real progress on their device business. it's a real possibility that they will stop losing money on that business.

now imagine it becomes even slightly cash flow positive, then bbry become a very interesting company with these other optionalities. how much will you value it at at that time, for a company with a good brand, a lot of cash, proven new management, growing again, etc... valuation will still be expensive. but it would have changed from a distressed company to growth company again. An example was LVS when it was at 4 dollars.

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