BlackBerry Ltd (BBRY) Inventory Swell Cuts Shareholder Value

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BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is in the middle of selling itself, though no contenders for the firm have made their interest public just yet. The company still has to run itself from day to day, however, and that’s not getting any easier. According to Bloomberg, the number of BlackBerry phones held in inventory is swelling, and that could lead to a large write-down.

BlackBerry Ltd (BBRY) Inventory Swell Cuts Shareholder Value

According to the piece, which was authored by Hugo Miller, BlackBerry Ltd (NASDAQ:BRY) (TSE:BB) has close to $1 billion worth of smartphones in inventory. The company’s launch of BB10 was highly anticipated, but ultimately a failure. Inventory gained 47 percent in the June quarter, according to the company’s last earnings report.

BlackBerry write down

A write-down is likely, according to the Bloomberg piece, depending on how much money the Canadian smartphone maker has spent building the phones. This won’t be the first write-down for BlackBerry Ltd (NASDAQ:BBRY) in recent years. It will, in fact, be the fourth such write-down in the last four years.

The write-downs at BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) started with the company’s ill-fated tablet, the BlackBerry Playbook. The company took a $485 million write-down on the tablet back in December 2011. Since then, the company had to write-down Playbook inventories again in March and June of 2012.

Writing down BB10 smartphones, the only products that BlackBerry Ltd (NASDAQ:BBRY) is really selling right now, would represent another nail in a coffin long closed. The write-down of Microsoft Corporation (NASDAQ:SMFT) tablets caused havoc for that company. A write-down of the only product BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has could play hell with the company’s valuation.

BlackBerry valuation

The write-down on inventory might be a hit to the final valuation of BlackBerry Ltd (NASDAQ:BBRY) if the company does end up finding a buyer. The valuation of BlackBerry shares in any buyout deal will more than likely differ based on what the buyer is looking for from the company.

According to a recent report from Jefferies, analyst Peter Misek put forward three possible futures for BlackBerry Ltd (NASDAQ:BBRY). All three could lead to different valuations for the same company. If BlackBerry is split up between different buyers, the brunt of this write-down might fall on the company’s smartphone division.

Misek reckons that division could be split into two parts, consumer and enterprise, in a buyout deal.

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