BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) share value has dropped close to the level of its liquidation value, according to Veritas Investment Research Corp. The troubled smartphone maker saw a decline of 4 cents to $7.69 in its stock price on NASDAQ on Friday. The current stock price is now only a few pennies above its liquidation value of $7.59 per share as calculated by Veritas, according to a report from TheGlobeMail.
A few scenarios
Neeraj Monga of Veritas noted that if an investor holds BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares for two years, then revenue earned from the share will be around $2.29 per share, which when added to the net asset value of the company ($7.66 per share) will give a value of $9.95 per share.
Assuming another scenario, the Veritas research mentions that if a buyer invests in BlackBerry at $7.50 per share and ran the business for service division revenue for two years and sold the shares at $10 per share, then the return earned by the buyer would be 33 percent.
Prem Watsa of Fairfax Financial has agreed to pay $9 per share for acquiring BlackBerry.
BlackBerry, Fairfax deal very possible
“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. He said that a deal failure will definitely have a serious impact on the stock, but distressed investors should become further interested at that point.
Monga is 75 percent confident that the deal will fall in place for BlackBerry and Fairfax, yet the shares are “highly speculative” for investors.
“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 Ltd (NASDAQ:BBRY) (TSE:BB) saw an increase in share price by one percent at $8.82 on NASDAQ on September 23 after Fairfax placed a bid to acquire the company. However, from that point, shares of Waterloo, Ontario based company have taken a plunge.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has been in trouble for a couple of years as the phone maker is facing intense competition from Apple Inc. (NASDAQ:AAPL) and Samsung phones. The Canadian firm continues to lose market share even though it launched its highly anticipated OS10 and new phone models Z10 and Q10 based on the latest OS.