Friday, April 26, 2013

Analysis of Blackberry

A Canadian smartphone and tablet producer

Company: Blackberry previously know as RIM (Research In Motion)

Business: Smartphones and tablets where they still have a keyboard on some of their models. Their focus was businessmen and generally companies with high security for all the data transfer.

Active: Product sales world wide.

P/E: -11.2




Blackberry has had and still has a very tough ride and we see it in the running P/E which is -11. The price to book is however not bad so they have money in their coffers.... still.... The earnings per sale is of course also bad at the moment. Their Book to debt is fully acceptable and they have been saving during the good years to be able to survive a temporary technological disadvantage which has occurred lately with the introduction of the iPhone on the market. The growth for the last 5 years has been 0%. This is not so disappointing since that means that they have at least managed to keep their revenues at a steady level even though the profits has dropped. According to Graham with this growth a P/E value of 8.5 would be motivated but then they need at least a yearly profit of $853 M and a profit earnings of around $220 M. Considering their earnings they spend a lot of money on R&D which as an example is half of what for instance Apple is spending. They are currently paying no dividends.

Conclusion: In the last two quarters they have started to show profit. Very small but still a profit. If this continue to improve also for the next quarters and they would show quarter earnings around $ 220 M then it might be of interest to step in as shareholder. Today I would not step in as a shareholder in this company. As a personal remark. I consider their biggest mistake to have been that they stopped focusing on companies and businessmen and wanted to run with the herd of flashy designed products that sold to the masses. Also, they have managed to keep up the revenue due to that they are making more sales in Asia and Africa. I played around a little with their new smartphone Z10 but I was not very impressed I guess I was too stupid to handle it but I am sure that the product is excellent. I was however much more impressed with the Lumia 920 and Windows 8.

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