DCG Posted September 23, 2013 Share Posted September 23, 2013 I have no idea what Fairfax is doing at this point. Seems like they've been making one awful decision after another the last couple years. If Fairfax thinks they can break this up and sell it for parts, then why is nobody interested in buying any of these parts now? Seems like a huge waste of cash from Fairfax. Prem & crew have not made a single positive impact on this company so far - why should anyone think that will change? Link to comment Share on other sites More sharing options...
bmichaud Posted September 23, 2013 Share Posted September 23, 2013 In terms of the point of maximum pessimism, it could be here or not. I just want to point out that nobody here was positive on Best Buy surviving at $12 a share in December and is now at $38!!! So much about people abilities to predict the future. This a phenomenal point, and one I keep reminding myself of as, after reading the three negative WSJ articles this morning (where were these when BBRY was trading at $18 earlier this year....), I don't see how anybody in their right mind would want to buy into this negativity.... Very difficult right now to see how shareholders will realize something between TBV and BV, especially when it appears every PE firm in the country has passed on BBRY....but exactly to your point, with multiple small countries worth of tech sector net cash floating around, an acquisition is a no brainer for $9 of tangible book value, patents worth $3B at book, ~65MM subs, a large enterprise network and emerging markets exposure. I keep seeing comparisons to Palm. Perhaps nobody will pull an HP, but I believe it is safe to say BBRY is far more attractive than Palm was at acquisition.... - negative book value - negative EBITDA - 452 patents and 406 applications versus: - positive book value - positive EBITDA - 5,236 patents and 3,730 applications http://www.nytimes.com/2010/04/29/technology/29palm.html?_r=0 Palm's financials are attached. Palm_Inc_Financials1.xlsx Link to comment Share on other sites More sharing options...
DTEJD1997 Posted September 23, 2013 Share Posted September 23, 2013 Hey all: Looks like Fairfax is going to take out BBRY. Deal is for about $8.4 billion. Looks to be at a VERY SMALL premium to current market cap. Maybe $8.45/share? I think Fairfax is making a mistake... In the last six months, i've only seen a handfull of Blackberries in the wild...Mainly Android devices (mainly Samsung), followed closely by Apple, a couple of MS, and some Blackberries... Link to comment Share on other sites More sharing options...
gary17 Posted September 23, 2013 Share Posted September 23, 2013 ???currret MC is 4.5b - 8B would be a 100% premium? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted September 23, 2013 Share Posted September 23, 2013 The silver lining here is that soon we're finally going to be forever done talking about Blackberry. It's been a lot of personal sniping back and forth. Link to comment Share on other sites More sharing options...
fareastwarriors Posted September 23, 2013 Share Posted September 23, 2013 http://www.cnbc.com/id/101054768 BlackBerry agreed in principal to be acquired by Fairfax Financial, a Canadian insurance company for $9 a share, in a deal that would total $4.7 billion US dollars. Link to comment Share on other sites More sharing options...
rkbabang Posted September 23, 2013 Share Posted September 23, 2013 http://www.cnbc.com/id/101054768 BlackBerry agreed in principal to be acquired by Fairfax Financial, a Canadian insurance company for $9 a share, in a deal that would total $4.7 billion US dollars. I said that it would go for "closer to $4B than to $20B". I'm not happy to be correct nor that the buyer is Fairfax. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted September 23, 2013 Share Posted September 23, 2013 I think there is value here between cash, patents, 70 million users, buildings and whatever else. The key is to stop the bleeding or stop selling new hardware and cutting expenses to the bone. People also have to keep things in perspective. BBRY current market cap is $4.3 billion and still has $2.6 billion of net cash. APPL is worth $440 billion and has well over $100 billion of net cash. GOOG has a market cap of $296 billion. So an Apple, Google, Microsoft, Samsung or some other large Asian player could swallow BBRY without a burb at a net cost of say $5 billion (net of cash), keep whatever they want, transition customers to their own platform and liquidate the rest to almost pay for the entire price. Seems like a pretty low risk acquisition to me. People will point out the $1 billion write-down and $500 million cash bleed but, what do you expect when an entire product line is a flop? So this is not an on-going cash burn rate. And since the company now seems to have an understanding of the magnitude of the disaster, they will cut aggressively and find real solutions. I mentioned before that once a company announces that it will explore strategic alternatives that quite often the price drops even below the pre-announcement price after a while due to various factors. It seems to have happened here again. In terms of the point of maximum pessimism, it could be here or not. I just want to point out that nobody here was positive on Best Buy surviving at $12 a share in December and is now at $38!!! So much about people abilities to predict the future. Cardboard Some things to consider 1) I can't remember if I stated publicly my support for Best Buy, but I bought in at $15 and sold for a slight gain after Schulz said he wasn't going to make a bid. Missed the run though :/. 2) I don't think this is a point of maximum pessimism. I started my position back in August of 2012 because people were disappointed the new phones had been delayed and there was very public talk of bankruptcy despite no debt and hundreds of millions in FCF. That was a point of max pessimism where people were somehow training bankruptcy for a debtless company and driving down the price as if liaison was a bad thing at that point. 3) The situation is different now, the phones flopped, they're burning cash now, and they've only written off one phone. What hastens if you get $500M write downs for the Q5 and Q10 and maybe the Z30? There is as much as $4 billion in purchase commitments right? When they announce those you might get the point of maximum pessimism. Good points Zach. Yes in Jul 2012 seems like we had exactly 0 buys on this stock. We have 6 as of today, so maybe we have some more to go. Anyways, now that CNN has called it. We can pack our bags and go home now http://money.cnn.com/2013/09/23/technology/mobile/blackberry/index.html?iid=HP_LN Want to apologize for the atrocious number of auto corrects in that post that don't make sense. Posting in this board from my phone isn't the easiest. It seems like you got the gist of the post though. I kind of foresaw this ending when Prem resigned. I sold 25-30% of my position between $10-$11 in the past few weeks and sold covered calls on the rest. I knew Prem wouldn't pay more than $10 a share and was concerned of ultimately being right about the asset value but still losing money on the position with a buyout offer from him. Now just disappointed I didn't sell everything. Link to comment Share on other sites More sharing options...
zarley Posted September 23, 2013 Share Posted September 23, 2013 Not clear if Fairfax is buying RIM or if a third party (potentially lead by Fairfax) is taking RIM private. I've read it both ways. As a Fairfax owner I hope Fairfax is doing a Berkshire type deal where they're involved in the financing and a third party will be the owner/operator. Something where Fairfax ups its equity stake and provides financing while a PE group owns the majority and runs the day to day. That's my hope anyway. Link to comment Share on other sites More sharing options...
onyx1 Posted September 23, 2013 Share Posted September 23, 2013 The silver lining here is that soon we're finally going to be forever done talking about Blackberry. It's been a lot of personal sniping back and forth. I agree, the tech threads have become unreadable. Link to comment Share on other sites More sharing options...
zarley Posted September 23, 2013 Share Posted September 23, 2013 http://blogs.wsj.com/moneybeat/2013/09/23/blackberry-shares-halted/ BlackBerry has entered into a letter of intent to be bought at $9 a share. The deal' data-ipsquote-timestamp=' valued at $4.7 billion, comes from a consortium led by Fairfax Financial. Fairfax owns about 10% of BlackBerry shares. The group would acquire all of BlackBerry shares not held by Fairfax.[/quote'] Link to comment Share on other sites More sharing options...
Cardboard Posted September 23, 2013 Share Posted September 23, 2013 "Prem Watsa, Chairman and CEO of Fairfax, said: “We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.” This is a farce! The price is dropped 20% Friday afternoon and then Mr. Watsa offers a sub 10% premium from the low and calls it "can deliver immediate value to shareholders". Cardboard Link to comment Share on other sites More sharing options...
Gopinath Posted September 23, 2013 Share Posted September 23, 2013 Anyone playing arbitrage until the take over/competing bid actually takes place? Link to comment Share on other sites More sharing options...
siddharth18 Posted September 23, 2013 Share Posted September 23, 2013 "Prem Watsa, Chairman and CEO of Fairfax, said: “We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.” This is a farce! The price is dropped 20% Friday afternoon and then Mr. Watsa offers a sub 10% premium from the low and calls it "can deliver immediate value to shareholders". Cardboard LOL wow. Incredible. Link to comment Share on other sites More sharing options...
Guest wellmont Posted September 23, 2013 Share Posted September 23, 2013 this sounds to me like fairfax is hoping to flush somebody else out the bushes at something higher than $9. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted September 23, 2013 Share Posted September 23, 2013 "Prem Watsa, Chairman and CEO of Fairfax, said: “We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.” This is a farce! The price is dropped 20% Friday afternoon and then Mr. Watsa offers a sub 10% premium from the low and calls it "can deliver immediate value to shareholders". Cardboard LOL wow. Incredible. Perhaps it was a half-truth. Delivering (somebody else's) value to (Fairfax) shareholders. Thus, he's delivering value to shareholders, perfectly correct as stated. Link to comment Share on other sites More sharing options...
enoch01 Posted September 23, 2013 Share Posted September 23, 2013 this sounds to me like fairfax is hoping to flush somebody else out the bushes at something higher than $9. +1 They get paid for a non-binding agreement! Create the impression of having to act quickly. Come on Ballmer, time is running out! Link to comment Share on other sites More sharing options...
Viking Posted September 23, 2013 Author Share Posted September 23, 2013 With the results released by BBBY on Friday it is clear that their business is imploding; Fridays reported results will accelerate the decline in their business. In a business setting, who in their right mind will purchase a Blackberry device today? Same goes for consumers. If Fairfax did nothing the value of their equity stake only goes closer to zero (as BBBY will need to raise money at some point and dilute existing equity holders); importantly, FFH will have limited influence over what happens. By taking the company private FFH must feel they will net more cash moving forward; perhaps this will cause the rats (business customers and consumers) to abandon ship more slowly (I doubt it). Regardless, this will likely be a big loser for FFH; even the best don't hit 100% (I think Peter Lynch said 6 winners out of 10 is a pretty good batting average). FFH swung big with this one... Link to comment Share on other sites More sharing options...
Guest wellmont Posted September 23, 2013 Share Posted September 23, 2013 this sounds to me like fairfax is hoping to flush somebody else out the bushes at something higher than $9. +1 They get paid for a non-binding agreement! Create the impression of having to act quickly. Come on Ballmer, time is running out! and hoping he can participate in the deal unlike "common" shareholders. Link to comment Share on other sites More sharing options...
Parsad Posted September 23, 2013 Share Posted September 23, 2013 this sounds to me like fairfax is hoping to flush somebody else out the bushes at something higher than $9. Prem doesn't make a bid like that hoping to flush somebody out. Although, because the bid isn't much higher than the closing price, if anyone is interested, you may see them come out now. But he'll take it at $9 if no one else wants it. Obviously, the team thinks there is some value there, while everyone else in the world thinks there isn't any. Love it! I guess Thorsten will probably be at our dinner next year! ;D Cheers! Link to comment Share on other sites More sharing options...
rkbabang Posted September 23, 2013 Share Posted September 23, 2013 "Prem Watsa, Chairman and CEO of Fairfax, said: “We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.” This is a farce! The price is dropped 20% Friday afternoon and then Mr. Watsa offers a sub 10% premium from the low and calls it "can deliver immediate value to shareholders". Cardboard LOL wow. Incredible. Perhaps it was a half-truth. Delivering (somebody else's) value to (Fairfax) shareholders. Thus, he's delivering value to shareholders, perfectly correct as stated. I had a small position in Fibrek and learned that it is safer to invest in Fairfax rather than along side them. That said, I still don't see why they are buying this even at $9. Link to comment Share on other sites More sharing options...
Guest wellmont Posted September 23, 2013 Share Posted September 23, 2013 th should pay for the dinner with his $55m. But if I were him I would not fly there on the corporate jet. ;) ps: it's good to be CEO! because in this day and age it's not how you perform once there, it's "getting there." :) Link to comment Share on other sites More sharing options...
Guest wellmont Posted September 23, 2013 Share Posted September 23, 2013 markets not expecting a higher bid.... Link to comment Share on other sites More sharing options...
Yours Truly Posted September 23, 2013 Share Posted September 23, 2013 Thorsten doing the happy dance right about now Link to comment Share on other sites More sharing options...
wachtwoord Posted September 23, 2013 Share Posted September 23, 2013 What? The low ball offer was accepted? Damn ... :-\ Link to comment Share on other sites More sharing options...
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