Donald Yacktman

Shares of BlackBerry have fallen over 30 percent since the company reported Q1 earnings. CNBC’s Seema Mody offers a preview of the company’s webcast tomorrow. John Goldsmith, Montrusco Bolton, and Donald Yacktman, Yacktman Asset Management, share their forecasts for the stock.

Donald Yacktman on Blackberry below video and transcript


seema joins us with a preview of the event. that’s right. the ceo will be in the hot seat answering questions from shareholders. many of which are expected to be frustrated given the recent drop in shares of blackberry and how that’s impacted their pension funds. william blair es heins to reiterate a message he made on the earnings call, quote, turnarounds take time. the lack of success has tarnished the brand, and that’s why we may start to see blackberry try to reposition its priorities by promoting the mobile device platform, b.e.s. the blackberry webcast starts at 10:00 a.m. eastern. guys, i’ll be on it and we’ll report back on anything interesting we see. back to you. all right, seema, thank you very much. the stock is down, disappointing sales on the hail mary phone they’ve been coming out with. what message can blackberry executives send to shareholders tomorrow? that’s a big question now. let’s ask him, joined by john goldsmith, who says we’re in the beginning of the end for the company, and donald from yakman asset management. saying it’s too early to make any calls. john, if you think it’s the beginning of the end, why are you still a shareholder? it’s a great question. we’re a fundamental bottom-up asset manager. we actually run one fund in particular, and the fund basically works off price momentum. we started or initiate our position back in september, so after the stock had a nice little pop. but obviously, we’re re-evaluating the position now. we sold the bulk back in september 2010, at over $46 a share. i mean, the right — john, john, while that’s interesting, why now do you have a position in the company if you think it’s the beginning of the end? right. this is — like i said, it’s not necessarily going to happen overnight, and with regards to the other viewer that you have, or the other speaker you have on, this isn’t going to be something that will happen within the next two weeks. i think the issue right now, more than anything else, is as long as they can prevent the cash burn from eating up into that almost $5.80 a share worth of cash that they have on the balance sheet, it can prevent the company from kind of going under/over, or in the short while. the issue right now, more than anything else, repositioning the company to try to maximize the value type of products they have, the higher-margin products, as opposed to the lower margin ones. donald, i’ve known you a long time. you’re one of the patient value investors, you’re willing to wait for a company’s stock to realize its value. is that why you’re holding on to blackberry? and why don’t you think this company’s in a death spiral here? well, remember ultimately this business boils down to what you buy and what you pay for it. we made a large investment in this company below 7, and we sold all of that and then some, at 13, roughly 14, in the low teens area. so this is a highly unpredictable situation. the 52-week range on this stock is from 6 and a fraction to 18 and a fraction. so think of it as like you’re drilling for a wildcat oil well. you want to spread your risks. we have a very small position in this company. you sound like you’ve been day trading this stock, don. i’m surprised at you. oh, no, no. no. but when you — let me ask you that question again, though. why don’t you think — or do you think that this company’s in a potential death spiral here? well, i think it’s a matter of probability, bill. it’s a matter of, what is the probability of things happening? i mean, i could walk outside and find an elephant, but i wouldn’t put a high probability on it. so what’s the probability of this happening? yeah, i got it. okay. and the timing. i think at this point in time, you know, what you do is you watch and see how it evolves. so, donald — because there are a lot of assets in this company. i guess why then should blackberry not go private and try to reorganize itself or focus on its turnaround outside of the public glare, which is the argument that dell is currently making? yeah, i think it — i think it’s difficult for most technology businesses to go private because of the capital needs and the way in which they operate. it’s a lot different if you have a consumable product or service than it is if you have a capital good like this. okay. john, just a quick question to you. at what level do you bail out of these shares? at what point do you say, i’ve had enough? i think if you look at the underlying, like, base value, like i said, $5.80 a share, you probably are in the — in the range of around $8 where that’s probably the maximum price point or gain point that you can probably take. but i think they’re going to try to do their best to more in terms of getting a good foot forward and try to get as much value and to basically highlight the points that are working. this stock could have a little bit of a pop. i think ultimately it goes down the same bath that boston scientific albeit in a completely different industry, but when you’re a mnopolous, and you have competitors, you have double whammies. the boston scientific was at 45 bucks, now at $10. blackberry over $150, now up $10 as well. once again, i’m not saying this stock is going to go to zero tomorrow. but i think, you know, the cards are on the table right now. i’ve got to go, but show me a two box if you can. either of you own a blackberry? i think i’m the last person in toronto to actually own one. you got one. don, you don’t. i don’t. no, you probably don’t even have a computer if i know you well. but jason does. jason does. okay. all right. so somebody in the office does. thank you both for joining us today. appreciate it very much.