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BlackBerry Ltd. (Nasdaq: BBRY) stock suffered a black eye last week, but now a white knight hopes to turn things around for the company.
BBRY plunged 17% Friday after the company announced it's anticipating a quarterly loss of nearly $1 billion, due largely in part to the failure of the new BlackBerry 10 line of phones. The BB10s were supposed to be the shot in the arm the ailing company needed.
BlackBerry also announced plans to slash its workforce by 40%, or around 4,500 people.
BBRY now trades around $8.50. This is quite a long fall from BlackBerry stock's heyday.
In June 2008, BBRY shares (then trading under RIMM) peaked at a lofty $148, giving the company a market cap of $83 billion. That was when the BlackBerry device was the preferred choice among top professionals.
However, the launch of the iPhone and devices using Google Inc's (Nasdaq: GOOG) Android operating system crushed BlackBerry.
In fact, the BlackBerry phones may be headed for the mobile phone graveyard.
All this has triggered a bid of $9 a share from BBRY's biggest shareholder, Fairfax Financial, to take the company private in a $4.7 billion bargain-priced deal. Fairfax owns roughly 10% of BBRY at around $17 per share, nearly half the price of the firm's bid, which has a Nov. 4 deadline.
The proposal values BlackBerry at an 80% discount to book value and a mere 0.17 times its sales, the cheapest revenue multiple on record among like-sized North American telecommunications or tech companies, according to Bloomberg.
And it's unlikely any other bids will value the company higher…
Competing Bids Won't Bolster BBRY Stock
The Fairfax bid might not be the last, but investors shouldn't expect anything higher – especially now that the stock is dropping.
Following Fairfax's contingent offer, BBRY gained a paltry 1%. Shares closed at $8.82 Monday, below the $9 offer price. Fairfax capped the upside at $9.