Blackberry shares roar on PE speculation
Shares of Blackberry (NASDAQ:BBRY) traded sharply higher on Monday morning as speculation surrounding the company’s future made waves. In pre-market trading on Monday shares moved higher by more than 7.6% to $10.50 following what was an incredible move last Friday. Late last week sources announced the company was considering the possibility of a private buyout and its future as a private company.
Blackberry shareholders have been in for a wild ride so far this year as sentiment for the company has flipped on a daily basis. Shares have taken a beating as sales of its new line of smartphones have so far failed to live up to the expectations of some analysts. The company faces an uphill battle to regain market share from Apple’s iPhone and devices that run on Google’s Android operating system. As relevance for the brand falls to multi-year lows, according to Google’s search interest data, one can’t help but wonder if there will even be a market for the brand in a mere decade.
Private equity has already offered support for the deal as the company has core stable cash flows that could support debt for a leveraged buyout. With only a $5 billion market capitalization and $3 billion in cash, going forward as a private company may be the best bet for the company. Operating as a private entity would allow management to strategically avoid the constant banter from shareholders and instead set up the company for longer term success. This news follows the recent announcement that Dell, another diying technology brand, will go private for $25 billion as a result of a private equity buyout.
While shares may be soaring today, sources have confirmed the deal is still a ways off into the future. Don’t expect an announcement anytime soon as a deal this large will need time to settle. Even if the company does go private, an uphill battle will still await new ownership.
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