NEW YORK (TheStreet) -- Shares of BlackBerry (BBRY) are up 4.23% to $10.35 in pre-market trade after it was reported that Samsung Electronics Co. (SSNLF) is continuing to pursue the acquisition of all or part of the company, the Financial Post reports, having obtained a document that lays that out and was corroborated by a Post source.
The document, prepared by investment bank Evercore Partners (EVR) in the last quarter of 2014, has a detailed roadmap in more than 40 pages of how various takeover strategies might play out, the Post said.
Evercore's report suggests that buying a minority interest in BlackBerry, either by acquiring 49% of the company, or leaving a block of shares publicly traded with an independent board, would have many advantages. BlackBerry would remain independent, helping the deal get regulatory approval from governments apprehensive about foreign takeovers, and such a deal could be less expensive for Samsung than other alternatives. The "key question," as the report phrases it, is: "Can Samsung accomplish its strategic objectives with less than 100% ownership?" according to the Post.
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"We rate BLACKBERRY LTD (BBRY) a SELL. This is driven by a few notable 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 area that we feel has been the company's primary weakness has been its declining revenues."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market, BLACKBERRY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The revenue fell significantly faster than the industry average of 13.5%. Since the same quarter one year prior, revenues fell by 33.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that BBRY's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.49 is high and demonstrates strong liquidity.
- BLACKBERRY LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BLACKBERRY LTD reported poor results of -$11.17 versus -$1.20 in the prior year. This year, the market expects an improvement in earnings (-$0.16 versus -$11.17).
- The gross profit margin for BLACKBERRY LTD is rather high; currently it is at 63.81%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -18.66% is in-line with the industry average.
- You can view the full analysis from the report here: BBRY Ratings Report