open letter it's ok too. "You can continue to count on BlackBerry." "We have substantial cash on hand and a balance sheet that is debt free." "Best in class productivity tool." BlackBerry fits right into the storyline according to its management. They are mortally wounded, but not dead yet. Characters in the show quickly become weary of others with scratches or wounds, just as BlackBerry investors need to proceed using extreme caution. BlackBerry's mortal wounds didn't come from other Zombies. The wounds are from Apple ( AAPL - Get Report), Google ( GOOG - Get Report), and to a lesser degree, Microsoft ( MSFT - Get Report) and Nokia ( NOK - Get Report). When your company is losing money, having cash in the bank only delays the inevitable. When losses are accelerating, the situation becomes abundantly clear the clock runs out of sand much quicker. Not all is lost for investors though. No, I don't mean that BlackBerry can turn it around against Apple and Android phones, but a buyout is all but certain. The uncertainty is the price, and maybe to a lesser degree, the timing. BlackBerry's CEO Thorsten Heins is highly incentivized to sell the company as soon as possible. One could make the argument that relatively speaking he won't earn more pay by holding on longer or by steering the company back to profitability. Heins' golden parachute is worth about $50 million, or more than four times greater than he may expect in annual compensation as a CEO trying to add shareholder value. Not an unpleasant exit package for someone who earned less than $2 million as the chief operating officer in 2011.
If we can expect a takeover soon, we only need to focus on the valuation of the company in order to determine if we want to buy shares, sell shares or stand pat. The risk to reward ratio makes a strong case for buying on dips. I believe investors will receive more than $8 in a takeover. You won't get an argument from me that investors deserve more, albeit the reality of receiving much more when management doesn't have an incentive to hold out for more diminishes at an exponential rate. That doesn't mean buying at $7.99 is necessarily a fantastic idea, but I do like BlackBerry under $7.90 and have bought shares for an average of $7.83. I also hedged the position by selling October $8.50 calls. Selling covered lowers my risk and generates daily income as the time premium decays. At the time of publication the author is long BBRY. Follow @RobertWeinstein This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.