The stock is also trading below book value, and at about 1.4 times tangible book value. Interestingly, both of those measures are not nearly as compelling as they once were, following the huge write downs the company took last quarter. That's a great lesson for investors though; in some situations relatively high book values can be a mirage, especially when a company is in distress.
One of the other interesting aspects of this story involves BlackBerry's largest shareholder, the same that just poured $1 billion into the company, Fairfax Financial. Company CEO Prem Watsa is legendary in value investing circles. Fairfax currently holds about 10% of Blackberry stock, and had attempted to take the company private last month, for $4.7 billion, but evidently had difficulty getting financing for the deal.
FRFHF data by YCharts
One thing that BlackBerry has on its side, for now anyway, is time. It's relatively low level of debt, and $3.1 billion in cash and short-term investments probably buy it a couple of years, or perhaps more, to right the ship. Of course, that depends on how much cash the company burns. The more difficult part will be getting the customers to re-embrace the BlackBerry.
An intriguing situation...
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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