BlackBerry After The Rout: Worth A Look?
Charles Sizemore | Jul 01, 2013 03:05PM ET
BlackBerry (MSFT ) -- one of the biggest and best-capitalized companies in the world -- BlackBerry’s chances of success get even slimmer. Microsoft, though still a small player in mobile, can offer a phone that complements its ubiquitous Windows PC operating system and the expanding Microsoft ecosystem. Microsoft can also afford to throw money at its mobile platform until it gets traction…even if it takes years. BlackBerry cannot.
This is all a long way of saying that, while appearing cheap on paper, BlackBerry is not an attractive investment. It is a value trap that gets weaker with each passing quarter.
Attractive Price Point
At some point, BlackBerry would be worth buying for its cash and patents alone. At, say, $5-$6 per share, a corporate raider could potentially buy the company, chop it up, and sell it for spare parts at a handsome profit -- assuming Canadian regulators let that happen. Or, a larger tech company could buy BlackBerry and absorb it.
But at today’s price, investors face the prospect of watching management destroy more value trying to resurrect a company that is past the point of fixing.
If you’re a short-term trader, you can try your luck at playing a dead cat bounce. But longer-term investors should stay away.
Sizemore Capital is long MSFT.
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