Tuesday, August 27, 2013

BlackBerry cash hoard jumps $200 million during money-losing Q1

Explain to me how this works. We all recall the sturm and drang that followed the release of BlackBerry's Q1 2014 results two months ago.

Media reaction was immediate and unanimous.

The sky had fallen. The company had well and truly tanked. Z10 and Q10 were DOA. Nothing left to do but close the door and sell off what's left of the parts.

So how do cash reserves grow by $200 million while you lose $87 million?

Even if the cash pile had stayed even, Blackberry could lose money at the current rate another thirty years before running out of money. Remember, the company has no debt.

My hunch is that a lot of this negativity comes from analysts who are motivated to drive the price down, mainly to facilitate covering short positions built up when the same analysts were declaring the death of BBRY/RIM back when the shares were in the $6 range.

There is reason to think the shorts are headed for a haircut. The next quarterlies could very well show a PRISM bounce as security-minded consumers discover that BlackBerry was absent from the list of smart-phone providers who share their customers' data with the NSA's domestic spying program.

Even without that, BBRY can keep losing money and growing their cash for a long time.

At ten or eleven bucks it's a great speculative buy.

1 comment: