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TheStreet Open House

BlackBerry (BBRY) Seeks to Calm Investors and Customers

NEW YORK (TheStreet) -- BlackBerry (BBRY) is seeking to reassure investors and customers in an open letter to be published by 30 media organizations worldwide on Tuesday. The one-page open letter advertisement will appear in both print and online publications, including Washington Post, The Wall Street Journal and The Globe and Mail.

"We have one important message for you: You can continue to count on BlackBerry," BlackBerry writes, highlighting its cash assets, lack of debt and commitment to cut costs by 50% as reasons for its secure future.

BlackBerry's outreach follows a tumultuous period for the smartphone maker as news of bids and breakups continue to shake up its share price.

BlackBerry is currently evaluating offers to purchase the company whole or piecemeal. On Friday, reports that founder and former co-CEO Mike Lazaridis was considering a potential takeover bid surfaced, an offer which would compete with a $4.7 billion bid a Fairfax Financial Holdings-led consortium proposed in September.

Though BlackBerry has signed a letter of intent with Fairfax, pending six weeks' due diligence whereby it can solicit alternative offers, many have expressed doubts over the deal since it relies on additional cash from non-Fairfax investors.

Private equity group Cerebus Capital Management is determining whether it will offer a bid after seeking a confidentiality agreement to evaluate all BlackBerry's financial information.

BlackBerry shares closed 0.87% higher to $8.14, leading the S&P 500 which is up 0.41%.

TheStreet Ratings team rates BlackBerry Ltd as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate BlackBerry Ltd (BBRY) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BlackBerry Ltd has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, BlackBerry Ltd swung to a loss, reporting -$1.20 a share vs. $2.24 a share in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 310.6% when compared to the same quarter one year ago, falling from -$235 million to -$965 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Communications Equipment industry and the overall market, BlackBerry's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$144 million or 133.96% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The revenue fell significantly faster than the industry average of 29.6%. Since the same quarter one year prior, revenues fell by 45%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

Written by Keris Alison Lahiff.

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