Let the Bidding Begin for BlackBerry

NEW YORK (TheStreet) -- If you own shares in BlackBerry (BBRY), don't expect to own them in a year from now. I know for some this is stating the obvious, but bear with me for a moment because it hasn't fully sunk in for many.

About two years ago I wrote BlackBerry would most likely be taken over within a year. It should have happened within a year and, if not for lack of leadership, it would have. I'm sure we can all agree to sell in 2012 would have been much better for shareholders.

BlackBerry's management deficient was rectified when Thorsten Heins took over as CEO, or at least it appeared that way. Heins was given an attractive package that highly incentivized a quick sale. Why it didn't happen only Heins and potential suitors know, but waiting until after the BB10 release is the definition of putting all your eggs in one basket.

BlackBerry isn't the first to forget Wall Street's golden rule of "buy the rumor, sell the news." Palm made the same mistake and sold for much less to Hewlett-Packard ( HPQ). What once was Motorola split into two companies and the wireless device maker division became part of Google ( GOOG). There are other examples, but you get the point. So where are we now within this context?

There's a lot of discussion about intellectual property values and cash on the balance sheet, but it's a distraction from the elephant in the room. The real challenge for Heins to receive his approximately $55 million parachute is finding a buyer who thinks it's a brilliant idea to go head to head with Apple ( AAPL), Google and Microsoft ( MSFT).

Surprisingly, it's not easy to find many CEOs willing to raise their hands and risk their reputation to challenge the biggest heavyweight contenders. This means the best option for BlackBerry shareholders is to sell to someone already in the space.

Some may want to include Chinese companies as a possibility, but if you think the consumer exodus was quick and sure, think about how fast enterprise clients would jump ship knowing the Chinese government is their "secure" provider. If a Chinese company does happen to buy BlackBerry, you can bet you won't like the price.

Fairfax Financial, BlackBerry's largest shareholder and potential buyer, can't pay as much as other companies for the reasons stated above, but its offer gives us insight. First, we can assume the shares are worth more to someone else and it won't be long before BlackBerry is sold.

The bad news is Fairfax's bid is probably more to spur interest than a genuine offer to buy. The good news it will probably work.

On Wednesday, it was reported that Cerberus Capital Management is considering a bid for BlackBerry. Shareholders won't like a bid by Cerberus any more than Fairfax, so I wouldn't put a lot of hope into it. But you should anticipate greater interest shortly.

Bottom line -- I believe BlackBerry finds a buyer that offers substantially above $8, making current shares under $8 an attractive buy relative to the downside risk.

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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