Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Analyzing Research In Motion Ltd (NASDAQ:BBRY)


Blackberry’s executive team is putting it all out there and is really trying hard to save the company by releasing a new phone, changing the name, and advertising the brand. I don’t think it’ll work. The phone has nothing over the iPhone or Samsung’s Galaxy S3, the name change will cost huge amounts of money to market, and the brand is synonymous with old, cheap phones that very few people use. Management is trying, but to me it’s all over.

Valuing Blackberry

Blackberry is losing money, and quickly. Over the last 12 months, they’ve lost $846 million, with an EPS of -1.66. I would usually end the discussion right there, but let’s say that the Z10 actually does produce some sort of profit. I can’t even give it an actual growth rate because they’re losing more and more money every quarter, but for arguments sake I’ll throw around some numbers.

If Blackberry makes a huge recovery, and for arguments sake gets an EPS of $2, growing the company at 10% with a PE of 20 (historical average over the last 5 years) will yield a future stock price of $71.51 five years from now. Let’s keep in mind though, Blackberry isn’t making money, and it could be a long time until they get an EPS of $2, and growing the company at 10% is really just a guess cause again, they’re not making money.

So what’s the point? The level of uncertainty in the future of Blackberry should prevent anyone from becoming an owner. If the Z10 catches on, which I don’t think it will but if it does, and Blackberry starts making a profit, the current price point may be tempting. At $16 a share as of this writing, that will not last long if Blackberry does start earning a profit. Thanks for reading.

Subscribe to get future posts by Alec Eiber

The article Analyzing Blackberry originally appeared on and is written by Alec Eiber.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.