Skip to main content

Stagehands prepare for the introduction of the BlackBerry 10 on Jan. 30, 2013 in New York. The smartphone maker’s stock price has fallen close to the embattled company’s liquidation value, says Veritas Investment Research Corp.

Mark Lennihan/AP

BlackBerry Ltd.'s stock price has fallen close to the embattled company's liquidation value, says Veritas Investment Research Corp.

On Friday on Nasdaq, shares in the Canadian technology company slipped 4 cents to close at $7.69 (U.S.). That's just pennies higher than what Veritas calculates to be BlackBerry's liquidation value of $7.59 a share.

Value is in the eye of the beholder, though, and Veritas analyst Neeraj Monga reckons that if a buyer were to keep BlackBerry running as a going concern for two years, the revenue derived would equate to $2.29 a share. Adding that estimate to BlackBerry's net asset value of $7.66 a share gives a total value of $9.95 a share, Mr. Monga said in a research note.

Story continues below advertisement

Fairfax Financial Holdings Ltd. said on Sept. 23 that it plans to offer $9 a share for Waterloo, Ont.-based BlackBerry.

"Some would argue that if the Fairfax bid does not close, the shares will fall to $5 – roughly equal to cash on books," Mr. Monga said. "While the immediate market reaction of a failed bid would undoubtedly be severe, we believe that distressed-asset investors could become even more interested at that point."

Veritas figures there is a 75-per-cent probability that Fairfax's offer will succeed, but the stock remains highly speculative for investors, he said.

"We believe, given our estimate of liquidation value, significant taxes receivable and a draft offer from Fairfax, that the chances of the bid succeeding are now higher," Mr. Monga said.

BlackBerry shares rose 1 per cent to $8.82 on Nasdaq on Sept. 23 after Fairfax's bid surfaced, but have declined 14 per cent since then.

If a buyer paid $7.50 a share for BlackBerry and ran the business for service division revenue for two years, and then sold for $10 a share, that buyer would realize a return of 33 per cent, according to the Veritas note.

Mr. Monga said Prem Watsa, who leads Fairfax, would likely oppose any move by the insurance and investment firm to lower its $9 bid and Mr. Watsa "would be extremely against withdrawing an offer entirely."

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter