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BlackBerry Leaves 4,500 Employees Out in the Cold

Or...

Sales of handsets are so bleak and burning through cash at such an accelerating rate that management believes even the best selling season of the year will result in increasing losses. It's hard to imagine sales have imploded on a scale that renders the fourth quarter a loser, but either way all related assets should be valued at scrap value.

After removing non-cash losses from inventory charges, the operating losses should come in between $20 million to $30 million from $1.6 billion in revenue. At face value, that's a long way from not being able to sell phones at a profit during the fourth quarter, leaving the most likely scenario BlackBerry is nearing a "strategic alternative."

Samsung, LG and HTC certainly make the list of usual suspects for contenders, albeit politically one has to give the edge to Google (GOOG), Microsoft (MSFT) and maybe even a longshot Yahoo! (YHOO). At the rate Yahoo!'s CEO Marissa Mayer is buying companies, Yahoo! might just enter the fray if for no other reason than to force Google or Microsoft to pay up.

How should investors price their shares?

Last month I calculated the scrap value near $7.75 a share as the starting low point. If you remove $1 billion in valuation, you're left with about $5.81. We can't add as much blue sky as before because we're not including consumer lower cost smartphones, taking the buyout valuation to around$11.50. Investors may find the right buyer to pay more, but the days of a $30 buyout left before the BB10 hit the shelves. Investors should plan accordingly.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Robert Weinstein is an active trader focusing on the psychological importance of risk mitigation, emotion and financial behavior of market participants. Robert co-founded the investing blog StockSaints, where he writes a journal about his trading activity and experiences.

In addition to TheStreet, Robert also contributes to Real Money Pro, providing real-time trading ideas for stocks, options and futures.

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