Research In Motion Ltd (BBRY), doing business as BlackBerry, is currently trading at an attractive price relative to the company’s value, as BBRY has solid assets which are generating cash, shows approximately $5 in cash per share on its balance sheet and holds zero debt, says Kenneth E. Lee, Managing Member of Bridgehampton Capital Management LLC.
“[BBRY] rated very highly on our capital structure rating tool last year around this time, and we started to take a deeper look at it as a software company rather than as a hardware company. The stock is trading around $14, and they have no debt; they have approximately $5 in cash per share on the balance sheet. They’ve been generating significant cash from their legacy message-delivery business, they also have a significant amount of intellectual property, and we believe their enterprise message delivery software platform, which is device agnostic, is going to be very powerful going forward,” Lee said.
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BBRY‘s stock price is currently attractive to Lee, as he believes the company will see limited downside over the next 12 to 18 months, due to the value and potential of the company’s assets.
“We view the breakup value of the company as $18 to $22, excluding the value of this new BlackBerry 10 operating system and devices. So for us, at $14 currently, this is very attractive, because we feel there’s limited downside. Obviously there’s no guarantee of that, but we feel from our analysis that the downside is relatively limited over a 12-month to 18-month time horizon because of the value of the software assets and the security business. And the device business has potentially significant upside because the operating system is, in our opinion and based on our research, superior, particularly in the way it multitasks and provides security to the user, when compared to the other dominant operating systems out there,” Lee said.
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