A BlackBerry Buyout Could Be Worth $14 a Share, Maybe

NEW YORK ( TheStreet) -- A BlackBerry ( BBRY) buyout is probably a best-case scenario for shareholders and could happen with a price in excess of $14 a share.

When Thorsten Heins became CEO I assumed he would find a buyer and sell. In the face of Apple's ( AAPL) and Google's ( GOOG) market superiority and ongoing slugfest at full speed, the idea of BlackBerry gaining altitude was like expecting a jet to pull out of a stall without engines.

Even Microsoft ( MSFT) through Nokia ( NOK), two companies that were moved to irrelevance in comparison to Apple and Android, gives BlackBerry considerable competition.

The real surprise for me was BlackBerry didn't announce this soon after the BlackBerry 10 was released. I suppose the fear was an announcement could slow sales. As a consumer, if you're worried you may not receive new updates and apps, it's just as easy to pick from another of the 20 or more phones sitting on the shelf.

As an investor, I wouldn't try to get cute and hold out for everything you can. This is a buyer's market, and every participant knows it. A year ago, BlackBerry was still cash-flow positive and was months away from releasing BB10. That's a whole different landscape than BlackBerry currently finds itself navigating.

Also, about a year ago, the full value, or at least more value, of the intellectual property could be sold. In the last year, some key court cases have effectively lowered the value of IP -- not so much because of patent trolls, which many claim are a problem, but to prevent entire products from not reaching the market due to relatively small pieces of a product. An example is the dispute between Samsung and Apple.

It appeared Samsung might not be able to import the S3, but in the end it was allowed and Apple was awarded about $1 billion as the consolation prize. The award wasn't exactly a slap in the face, but nowhere near the $2.5 billion Apple wanted. More importantly, Apple's patents weren't enough to stop Samsung from selling the Galaxy S3.

BBRY Free Cash Flow Chart BBRY Free Cash Flow data by YCharts

After adjusting the balance sheet from a bird's eye view, I think BlackBerry has scrap sale assets near $7.5 billion. Remove $3.6 billion in liabilities and you have a total value near $4 billion.

BlackBerry has 515 million shares, so you take $4 billion divided by 515 million shares, leaves you with $7.75 per share as a starting point. The right buyer may view BlackBerry as a company that can generate profits under his or her management, and that brings us to a buyout valuation above $14 a share.

If you're holding and hoping but still want to grab some of the excitement while it lasts, consider selling covered calls. You can receive about 26 cents for September $15 strike price calls. If BlackBerry is sold for above $15.26 you won't more, but it can take a while before anything happens.

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.

If you liked this article you might like

Johnson & Johnson, STMicroelectronics: 'Mad Money' Lightning Round

Johnson & Johnson, STMicroelectronics: 'Mad Money' Lightning Round

It's a Flash Sale!: Cramer's 'Mad Money' Recap (Wednesday 1/31/18)

It's a Flash Sale!: Cramer's 'Mad Money' Recap (Wednesday 1/31/18)

Thought You'd Never Buy Another BlackBerry? Think Again

Thought You'd Never Buy Another BlackBerry? Think Again

Pandora Sells Off; Unemployment Numbers Aren't as Rosy as They Seem -- ICYMI

Pandora Sells Off; Unemployment Numbers Aren't as Rosy as They Seem -- ICYMI

Closing Bell: LIVE MARKETS BLOG

Closing Bell: LIVE MARKETS BLOG