BlackBerry has announced a 12 million common share buyback program which will be run over the next year. The buyback program has been offered to offset dilution from employee stock plans, says the company. Following the announcement, shares of the Canadian firm rose by 2 cents but ended the day in the negative.
BlackBerry to buy back 2.5% of float
According to the Canadian firm, the buyback program will start on June 29 and continue for the next 12 months. As of June 22, around 529.5 million shares of the company’s stock were outstanding, and the latest buyback will account for 2.5% of the total public float.
Based on the latest available stock price, the program will cost the Canadian firm around $105.9 million. The final amount the firm pays will vary depending on how many shares it actually buys and the price paid on the NASDAQ and Toronto stock markets. Additionally, only after approval from the TSX, the Canadian firm may opt for forward purchases or swap contracts related to its common shares.
Chen expects value to be higher going forward
BlackBerry shareholders approved the new employee share purchase plan and an increase in the number of shares under the Canadian firm’s equity incentive plan on June 23. BlackBerry CEO John Chen noted that with the buyback plan they want to benefit from the company’s strong cash position to purchase shares at a time when the stock price “does not reflect what we view to be the underlying value and future prospects of our business, without adversely affecting our strategic initiatives.”
Earlier this week, BlackBerry reported its fiscal first quarter results, posting an adjusted loss of $28 million or 5 cents per share (compared to a loss of 11 cents last year), missing the consensus estimate. However, the company’s software revenues jumped 150% to $137 million. Revenue for the quarter came in at $658 million, compared to $966 million a year ago. Analysts expected a loss of 3 cents a share on $679 million in revenue. The software numbers were lauded by Wall Street, reflecting the commitment from the company on shifting its focus on secure B2B software communication solutions.
On Thursday, BlackBerry shares closed down 2.27% at $8.63, and year to date, the stock is down by almost 22%.