Yes, 11,000 tech writers have already weighed in on the deal proposed by Canadian firm Fairfax Financial to take wireless device and services company Blackberry private for $9 per shares. At least we got the number right. And some people got it extra right.
Back in early August, Rayno Report told you why Blackberry was less than $10 a share, possibly much less, even though at the time it was trading at $11. Who gets the prize from research? Analyst Michael Genovese of MKM partners, who told us in our Aug. 13th story that Blackberry was worth $9 per share. Bingo, Mike! You won the Blackberry lottery.
Of course, the deal is not done. The market traded the stock at about $8.80 yesterday, meaning there is still some $.0.20 of doubt. Now “arbitrage” traders will come in and make bets on whether the deal really closes at $9 cash.
As was alluded to earlier in our article, the company had too many warts to demand a market premium. The Fairfax deal shows you the company had less value than folks perceived. This was due to several problems:
1) Eroding value. The company was losing money and users. This means that every month the company went without a deal, it was losing value.
2) Patent portfolio limited. Blackberry’s patent portfolio was smaller than those of some other wireless technology companies, such as Motorola, which had sold assets recently. Also Blackberry was a net payer of royalties because of licensing money due to Qualcomm.
Now, in case you didn’t follow the news, here’s a roundup of some of the 11,000 articles that have been written on the deal:
Fairfax is allegedly the “Berkshire Hathaway of Canada.” Hmm. But isn’t that a bit like saying “He’s the best basketball player in Iceland”?
What does Fairfax see in Blackberry, anyway?
Are they already losing money on the deal?
Investors: Time to take the money and run?
Is that enough? Or do you want 10,996 more articles? They’re here.
(Disclosure: The author, thankfully, has no position in this stock.)