iNVEZZ.com Wednesday, October 2nd: Canaccord Genuity on Monday issued a report predicting that Fairfax Financial Holdings will acquire BlackBerry (NASDAQ:BBRY, TSE:BB) but at a lower price than the originally proposed $9 a share. Analyst Michael Walkley forecast a final offer for the troubled smartphone maker of just $7 apiece. BlackBerry’s share price yesterday closed marginally lower at $7.92 and has fallen 1.14 percent in pre-market trading today.
“While we maintain our hold rating, we lower our price target to $7 reflecting our updated sum-of-parts valuation and our belief the most likely outcome for BlackBerry is a sale to Fairfax Financial and its partners at a lower price of $7 post further diligence,” Walkley wrote in the report. Fairfax’s chief executive officer Prem Watsa, who proposed a Fairfax-led consortium to acquire BlackBerry for $4.7 billion (₤2.9 billion), has yet to provide markets with information about the financing options and the likely participants in the deal. Watsa has until November 4 to come up with a letter of intent after having been given the opportunity to go through BlackBerry’s books.
Bernstein Research analyst Pierre Ferragu has also valued the smartphone maker’s shares at $7, saying that BlackBerry’s business was “at a strategic dead end.” Ferragu discarded the possibility of significant interest among Canadian pension funds, rumoured to be the most likely partners in a Fairfax deal. “We understand there could be some distant interest there, given the specific Canadian twist of the operation and the heavy emotional side of the operation for Canada, but we believe only one or two funds may feel confident investing that much money in such a risky venture,” Ferragu said.
A report from Kantar Worldpanel released on Monday showed that BlackBerry’s share of the global smartphone market has continued to dwindle. In the US, BlackBerry’s devices now account for only 1.8 percent of the total number of smartphones used. In the five biggest European markets that share is 2.4 percent, less than half of what it used to be a year ago.
BlackBerry dismisses unflattering Gartner analysis
BlackBerry has hit back at Gartner after the technology research firm advised its smartphone clients to halt purchases of products made by the Canadian company and go elsewhere for enterprise business.
"Gartner recommends that our [BlackBerry enterprise] clients take no more than six months to consider and implement alternatives to BlackBerry. We're emphasizing that all clients should immediately ensure they have backup mobile data management plans and are at least testing alternative devices to BlackBerry,” Bill Menezes, principal research analyst at Gartner, told ComputerWorld last week.
On Monday, just days after Menezes’ remarks, BlackBerry issued a statement saying that the conclusions drawn about the viability of its business plans were “purely speculative”. The company added that it remained committed to “deliver the most secure and powerful mobile management solutions and smartphones to our customers.”
BlackBerry last month revealed that it would make half its workforce redundant by the end of the year, after posting losses of $950 million (₤587 million) in the second quarter (Company posts deep quarterly loss http://invezz.com/news/equities/5774-BlackBerry-share-price-company-posts-deep-quarterly-loss).
As of 14.00 BST buy BlackBerry shares at $7.88.
As of 14.00 BST sell BlackBerry shares at $7.84.