BlackBerry (BBRY) Stock Gains on New Share Buy Back Program

NEW YORK (TheStreet) -- BlackBerry (BBRY) shares are up 0.34% to $8.86 in early market trading on Thursday after the mobile phone and software company announced a new 12 million share buy back plan.

The reason for the buy back is to offset dilution from employee stock plans, according to the company.

Blackberry has approximately 529.5 million outstanding shares with about 464.7 million shares owned by public investors. 

The buyback, which will conclude June 28, 2016, represents about 2.5% of the company's publicly held shares.

Insight from TheStreet Research Team

Jim Cramer, co-portfolio manager of the Action Alerts PLUS charitable trust, is not sold on BlackBerry's turnaround and cautioned investors to stay away from the stock in a Real Money Pro blog post yesterday titled "BlackBerry and Darden Are on the Wrong Path".

Here is what Cramer had to say:

First, let's tackle BlackBerry. Ever since John Chen came in almost two years ago, there have been three narratives at work:

  1. Don't worry about declining hardware sales, we will either fix that or sell it.
  2. We will boost software and licensing sales so you realize we are an asset-lite company a la market fave QUALCOMM  (QCOM).
  3. We will sell ourselves if we want to.

All three narratives were trashed yesterday. First, the hardware sales were horrendous: 1.1 million smart phones vs. 2.6 million last year. Awful. Chen's plan? "I don' t want to give up the hardware business. I think there's a shot at sill making money in it." So much for fix or sell it.

Second, the software business looked, on paper, like it was having steady growth. However, when analysts asked about the linearity and consistency of the growth, Chen and his team were totally evasive, or clueless, or both, refusing to disclose exactly what was one-time and what was ongoing in revenue. And sell the company? Chen put together a string of five "no's" in one sentence to say the company's not for sale.

Disastrous.

-Jim Cramer, 'BlackBerry and Darden Are on the Wrong Path', 6/24/2015

Second, the software business looked, on paper, like it was having steady growth. However, when analysts asked about the linearity and consistency of the growth, Chen and his team were totally evasive, or clueless, or both, refusing to disclose exactly what was one-time and what was ongoing in revenue. And sell the company? Chen put together a string of five "no's" in one sentence to say the company's not for sale.

TheStreet Ratings team rates BLACKBERRY LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"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 company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly decreased to $134.00 million or 55.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • BBRY has underperformed the S&P 500 Index, declining 12.95% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • 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 33.3%. Since the same quarter one year prior, revenues fell by 31.9%. 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 0.44, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.28 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: BBRY Ratings Report

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