BlackBerry could wind up with over $4 billion in cash

By Chris Umiastowski on 7 Nov 2013 10:21 am EST

This week started off with a bang. Fairfax pulled away from its initial offer to take BlackBerry private, and instead brought forward the idea of a $1 billion convertible debt offering. With BlackBerry’s balance sheet showing $2.3 billion in cash as of last quarter, this financing will put BlackBerry’s total cash balance over $3 billion when complete. It’s expected to be complete within two weeks of the original announcement.

Yesterday Bloomberg’s Hugo Miller put forth this fascinating story:  BlackBerry’s tax lawyers are working hard on a plan to get back $1 billion in taxes previously paid to the Canadian government. The company has previously said it would get back $500 million in the spring of next year, but they’re apparently accelerating the process and working on a bigger tax refund claim by applying current losses to past tax bills.

BlackBerry’s tax lawyers are working hard on a plan to get back $1 billion in taxes previously paid to the Canadian government

If this all works out it means BlackBerry will likely end the calendar year with over $4 billion in cash, and $1 billion of this cash offset by convertible debt. Notwithstanding the possibility that BlackBerry could burn through a tremendous amount of cash and inevitably fail to turnaround the business, the stocks valuation has become attractive to those seeking deep value based on turnaround prospects. 

BlackBerry’s market capitalization is $3.4 billion today. With cash (less debt) of over $3 billion, assuming the tax refund happens, and a bunch of other real assets (land, buildings, patents), the stock is probably cheaper than it’s ever been in history. 

Can they get the hardware business to at least break even?  Can they push forward in services and make money? At this point, all Wall Street needs to see is a valid business model that makes ANY amount of money consistently in the future, and the stock goes higher. 

Assuming no takeover bids come into play here, I think we’re going to have a lot of interesting discussion about the business of BlackBerry over the coming quarters.

Topics: BBRY Editorial

Reader comments

BlackBerry could wind up with over $4 billion in cash


Agreed it is great if BlackBerry will have over 4 Billion by the years end. Even over 3 Billion is good but they ll be burning through the cash like Chris said.

I just hope this new CEO has a plan and can slowly start showing some kind of turnaround happening for BlackBerry as they don't have a lot of time. One thing is assuring their customers who are holding off from upgrading to BES 10 because of the uncertainty.

Apple was in a far worse position back when Steve Jobs came back as an interim ceo.

So what? They are not in business to save money and have a robust bank account.

Spend money on marketing and developing relationships!!! Amateurs.

Posted via CB10

Yes that, but what about setting 1 or 2 hundred mill aside and start a VC arm to BlackBerry. Anybody know if they already do this? Working in concert with Quantum Valley they should be able to help startups with promising tech get going and they would have first dibs on equity transactions should any show real potential.

Swiped with one thumb from the virtual keyboard of my awesome Z10!

The interim CEO, if memory serves me well, already stated that there are two plans on the table at this time, one being an immediate ASAP plan and a long term plan. I believe the immediate will repair BBRY's ridiculous marketing and sales.
Can they get the hardware business to at least break even? Yes I think they can, and some.

Well, I am back using a BlackBerry. Its fortunes will improve. The Z30 brought me back. If BlackBerry can continue with proper hardware not the Z10 crap then it will be fine. Cut out the dodgy designs of the Z10 and make a candy bar firm factor, all gorilla glass at the front top to bottom, slim, 1080p screen, and get Google play on board. That is a simple formula that will get BlackBerry back on track. I, and change the name. The brand is too damaged.
Otherwise I am losing the z30..

Posted via CB10

Easier if you just give me your Z30 (jk) and find yourself that special phone based on your 'simple' formula.

I would love to buy more but I do not have funds laying around to justifiably do that, especially with the less than positive outcome. Might buy a few more. It was more to just own a tiny piece of the company that I care about and support. I spend a lot of time every week researching and marketing to other people. Might as well get a few shares; win, lose, or draw.

Posted via CB10

DecAway, my thoughts exactly when I wrote the above.
Same boat here, with more shares added small block after another in the last 3 years. I presume you know where to look in the forums ? Under the News and Rumors section, there's a BBRY one. A specific thread title, that'll match your "company that I care about and support" will lead you near to us, the self-called StockBerrians ;)

I also have 20 shares. I used to have 200 but sold them at a small loss several months ago. I'm only keeping these 20 for fun

Your break even is at 7.99 with the fees or 12.4% increase before you get a penny out of this investment...

But it's the passion that matters ;-)

Posted via CB10

You miss-read what he wrote. He used to have 200 but sold and now has 20 shares. He did not buy 20 shares. And when the stock goes up, he can sell the 20 with the added $8 fee ;)

Well, good luck to them.
The Interim CEO has to really push hard for things to change around.

I'll take a pass on Lenovo doing hardware for any of my future BlackBerry phones.
I can do without Chinese spyware-embedded chipsets.

Posted via CB10

Secure enough for law offices, financial institutions and governments the world over, but not secure enough for you?

Canada rejected an offer from them..
I work for one of the largest financial service companies and the are not allowed. Period.

Live and learn!!

Or not..

Posted via CB10 on a Verizon Z10 running

Lenovo rather.

This CB10 us acting strange. Hope they fix it someday!!!

Posted via CB10 on a Verizon Z10 running

Is it about growing the company or making short-term profits for shareholders? After taking their profits, those shareholders will go elsewhere. Most large investors don't give a damn about the companies they invest in - it's about the money - what's in it for them.

I don't think that's a fair judgment call. The stock price is where it is because of low sales and bad press. The low sales are due to poor advertising, bad pricing, and slow execution, but not because the hardware itself or any other aspect of the phones are bad.

Posted via CB10

What does BB charge these governments all around the world,anyway?If BB is so important, why not charge double? It's supposed to be a niche market,So,Show me the money,Anyway when the stock goes down to low $3 next ER or before, I'm in for a couple of thousand shares more just to average down.I feel like a beer now.

Use $1B to market the crap out of BB10 and the BB10 phones, as well as BB's incredible MDM solutions. Show the cool stuff they've got in BB10 - start with how fast you can multitask!
It is important that marketing be specially targeted to users - show what BB10 can do!

Fascinating stuff.
With $4 Billion in liquidity, the strategic direction discussions Chen must be having, have to be fascinating. There are so many options for where to drive this business.

Posted via CB10

Gotta figure out the marketing. EVEN if it's 'more' focused on the services side...why not a great BBM ad and a great Z30 ad for the holidays?

The bond offering wil go out at $ 1.25 Billion, they'll dump a Billion in Real Estate and finally license patents to Lenovo so that they can come to North America. I see deals coming out of the visit to Fackbook and Lenovo getting what they desperately need. Raise that cash number up a couple of billion. Chen was taken on before the trip to California, there's likely a good reason for that. Look for big changes now that they know what others want from them. Wouldn't you float a huge dilutive bond issue if you knew what they know now?

Q to Chris: given the fact that the shorts are building for the Dec earnings report and remembering the apparent indifference to the share price in recent past, are there any real strategies that management can employ to thwart these shorter? (that are legal :))

I've just red an article in the above mentioned "publication"...the poor bugger who wrote it complained that he couldn't get copy/paste working on the Q10 he owned for a while (short). They seem to write a lot about things they don't understand or haven't got a clue about...not mentioning the bias...
I wouldn't pay attention to their junk articles...
The only reporters that tell the truth without altering it to their interests, nowadays are those who write the obituaries...

Now they need to immediately come out with two bitchen new phones. A Z50 with a 2.2 ghz processor, 1080p display, and a bad as 15, 20 mega pixel camera. A Q50 with similar specs and more of a rectangle screen. I love my Z10, but to lure folks away BlackBerry needs to wow them.

Posted via Jiggy's Z10

Only androids need those 2.2ghz, they are so poorly optimized
Look at the Iphone 5s has been humiliating every other phone with a dual core and 1.3ghz.... think about it... it is so much faster than other phones like the LG or the Samsung GS4

Is that a joke? Sure BB10 doesn't need it,but would you be complaining if that phone actually came out? I don't get comments like these, ios is very mature and we'll optimized for low hardware which is why ios7 can work relatively well on a basically 3-4 year old IPhone 4. The PlayBook couldn't even get BlackBerry 10 so I'd rather devices going forward be more than future-proofed. And Android 4.4 has been catered to work with low hardware specs as well. Look at the Moto X, it has mid range specs and it works well, same with the older Nexus devices. It isn't 2011 anymore where android devices "need" quad core processors to be fast. It's about the software optimization which is usually better on lightly skinned to vanilla android devices.

And I don't get your 1080p argument. The only effect that would have on a phone is battery life. And I don't want to hear that the human eye can't see the difference or 720p 40 inch tv excuse. Most tech reviewers notice a difference and if you do a side by side comparison it's not hard to spot a difference.

While I agree with some points ultimately what's wrong with BB10 not having killer specs? Why settle?

Posted via CB10

That would be cool, but I don't think their phones are as innovative as their software. Battery technology is about to drastically change in the next 1-3 years and I hope BlackBerry is the first to come out with it. That's the next major innovation in smartphones I think, cause that's one thing everybody can agree on, poor battery life of all touchscreens.


I really am hoping they can realize their patent for the beneath the screen fusion battery charger.That would certainly be the innovation BB needs.

Expected $500mil, now up to $1.5Bil ...
Some may have been a little fast in the "dead next week" tune, again.
Also, could all the ranters remember that this turnaround has been driven by current management ... well ... maybe some judgments would be less acid. JM2cts

Or just make a Z30 like phone with 64Gb of internal memory, 4Gb of RAM,sd card slot that can use 64Gb card and stock BB10 with no bloatware.

Is there legal implication on paying back debt holder earlier? Hypothetical speaking if Prema Watson wants to recover his losses through early redemption of the debt.

Posted via CB10

They will burn through that much cash in ~ 2 years. BlackBerry needs sales to pick up.

Posted via CB10

hey chris..

nice article.. here's my speculation based on your article.. nobody at blackberry is stating when chen started.. i have this strong feeling he started before the z10 write down. that decision came to all of us as a surprise.. they didn't write down some z10s.. they wrote down all the z10s.. with chen's background.. i believe that he put this in place. this was in preparation to apply current loses to the tax return. this seems to be a very smart move.. honestly, one we didn't see before from the old management. this would give more leverage when he takes control now..

No point sitting on all that cash if they're not gonna use it and put some like-no-other marketing out there.

Posted via CB10

They need the cash as an insurance policy if ever they get sued for patent infringement in the future,remember the 600 million they paid out a few years back,cash is good to have.

Time to be smart with the extra cash.

Frank Boulben ; you're in the last chance saloon.....All eyes are focused on you.

BlackBerry .....Get It Done

Posted via CB10

I'd like to see them invest in a LOT more advertising and BlackBerry stores put in a few places around the U.S. and other markets where they are at their weakest in terms of presence. I'd also like to see them step out of the box in terms of hardware, at least for one handset, and produce one of these concept phones like the BlackBerry Blade. The hardware lookin "cool" would at least bring interest just from the sight. It further show that not only is BlackBerry back, but they are back with something that separates them from the competition.

Posted via CB10

First they really need to get a top notched creative ad firm to help come up with a strategy and messages that will have real impacts. BlackBerry has been doing a LOT of advertising but ineffective and lame. I have seen tons of online ads because I have googled about BBRY and its phones, but they just show the phone image and a few sentences. When is the last time anyone pays attention and clicks on an online ad? Also simply showing the existence of a phone and its specs/features will not create buzz and connect with customers. They need to find the right message and media to kick start the buzz and word-of-mouth ripple.

I think what I am getting from everyone is......BE F**KING BOLD WITH THIS $$$$. Quit sitting on your arses and do something that will turn heads.


They have the resources and the cash to do that. They just need someone who knows what they are doing on the marketing side of things and, regardless of how high end they make a device, the price needs to undercut the competition, not match it. At least in the beginning, until they manage to open the flood gates on new and returning customers.

Posted via CB10

They need to come out and say they have the best quality and most innovated smartphone on the market. Even if they don't have the best hardware, people take notice and might look into the BB10 line and try to see why they are making such bold statements.

They need to intrigue the consumer, Say your the best, but don't give everything away, make them wanting to research it themselves.


Is there a chance they could right down a profit this quarter?

Because they already wrote down all the unsold Z10, then all the layoffs and real estate. Plus the influx of cash flow recently. Maybe next quarter


Great. They have money. If they continue on the course they're on now: they'll burn it all.

I really hope this new chap has some smart ideas. No point having all that cash if one doesn't use it wisely.

Posted via CB10

If you have the "best" phone out there aesthetically and from an operating system your DOA with no apps.

Business "prosumers" need apps to get work done. At meeting last night dude loved his BlackBerry said hated to get ride of it but the Company we work with runs apps on Iphone and Ipad.

He won his ipad2 through the cool any as he said it would of never bought it. He said I over BlackBerry would never buy anything with Apple. I was the only BlackBerry in the room of a hundred.

He now has all Apple. I asked him how long did it take for you to give up your BlackBerry? "A long time." But eventually he did. Only reason? Apps.

Trust me we love our BlackBerry keyboards and Z10 but the reality is Apps.

My 10 8 2 year old all love phone iphone. Dads lacks apps. What phone do you think they will want when they get older?

Mr Chen. Get out of Waterloo into Silicon Valley and get the apps.

Get back to the phone side of things. All this business stuff is not my cup of Earl Grey. But hey, I suppose it is necessary. However, there is way too much of it on the site now.

Thanks for the update, Chris. Now, Blackberry, how about using one of those billion on apps. Seriously. Not kidding. A billion just on apps. I don't use many apps, so am perfectly happy with the current app situation, but it should be obvious that what is hamstringing BB10, more than even the lack of marketing, is the lack of quality, native apps. An abundance of quality, native apps + BB10 (10.2+) = the best mobile OS on the planet, IMHO.

What is the basis of them being able to get $1 billion back from the government?
I'm just curious as to why they may be entitled to such a refund??

CB10 on my Z10

The US government at one time had income averaging to allow for an increase or loss during a particular year. Us could average income for the last five years.

Posted via CB10

Looks like saving BlackBerry is indeed in Fairfax's plans after all. They don't want to see the company break apart or be sold entirely because THEY'RE NOT ONLY IN THIS FOR THE MONEY short term. First they have to save the company. LoL, see?

Posted via CB10

I don't think advertising will do anything if they don't have anything new to advertise. They need to spend money on big name apps. It's pretty apparent that BlackBerry can't wait for instagram, Vine etc to jump the ship. Apps are a deal breaker for a lot of people which is why people stay away from BlackBerry. Regardless of how great the phones are They're going to go nowhere if they don't make this happen.

Posted via CB10

Thanks Chris. Btw I would love for you to do an article about the crazy-ass twitter valuation that's going on right now and what that means for the valuation of bbm. If twitter is worth over 15 billion with 250 million users, I think it's safe to safe bbm can be valued at 2 billion alone. With over 4 billion in cash as well, this 3.5 billion valuation is nuts!

Posted from my Q10 on the West Coast

The cash at last Q is certainly not static. They had alarmingly high payables and inventory that was still very high, likely requiring further writedowns. If opex is still $1bn/q for a couple q's before the restructuring takes place, and service revenues keep declining to the $600mm and below range, we could be looking at still $400mm cash burn per Q for a couple Q's.

They had $3 Billion at one point and didn't advertise foe $h1t. So what will and extra Billion do for them?

Posted via CB10

Whoa... I was shocked to see the title and happy after seeing the news :)

Posted via the awesome keyboard on Z10STL100-1/ using CB10 App

Yeah, he must be, we never hear about how much those biggies have submitted on their expense accounts,I'm sure we all would be schocked.The party's over!!! I hope,that would be a great first step coming down on the free rides BB has given those executives,all of them.

Cash you good hands could bring benefits. The people leading the company is more important than the money itself. But, of course, money is esencial.

Posted via my awesome BlackBerry Z10

Chris - your article says 2.3 billion, whereas the formal results anouncement (press release) did say 2.6 billion; also, at Blackberry Jam one of the lead guys (Saunders?) did also confirm 2.6 billion in cash as of the end of last quarter. If all goes through, they would actually have closer to 5 billion based on these numbers. Can you confirm your number is correct ?

Lets not forget the $900M tax pool which is probably why they are requesting the advance or is this $1B tax credits

Once money is handed over to the government let's not forget that getting the money back is not an easy task. (Unless you're a Senator. LoL!)

Well Chris, when you take on a billion in debt for a billion in debentures, you net zero in the real world. PW put up 250 mill and this is really a tactic to essentially buy the company for cheap. Why pay 4.7 B when you can do it for 1 bill. The 2.3 Billion in cash assets is an ice cube in the sun and entirely dependent on unwinding purchase obligations going forward for hardware. Yesterday I was thinking maybe this was back at a buy signal but net receivables + cash less payables is 1,733 mill or about 3.36 a share not counting BB's off balance sheet obligations. By it's own filings BB shows 2.9 bill in purchase obligations and commitments mostly over the next year. Seeking Alpha has an excellent article on all this and how PW essentially took control of distressed companies in the past the same way (issuance of debt convertible to common shares) for cheap. So I will enjoy the heck out of the phone but PW is a barn burner, not a savior. I think he is sticking around to sell off the parts but time will tell.

Seeking Alpha articles are written by people with opinions - some informed but none I would put any money on.

Wow! Not only has this desk brought BlackBerry back from the brink of a takeover, it's brought them into a significantly better cash position.

Honestly, though, what strikes me is that people will, once again, begin to focus on BlackBerry as a standalone business that can build value on its own accord and resources. Investors will have to look at the possibility of a comeback as the means of seeing a ROI, and not a sale.

Posted via CB10

Trying to get our government to fork over 1 billion dollars? Good luck with that! Still good news though

Posted via CB10

i wish i could apply current losses to my past taxes,,, i'd be a very comfortable guy,,, only on wall st. could you pull this off...

Well at least they can think about how to turn this company around without fear of getting close to banckrupcy from cash drain in losses and expenses.

Please Mr Wang.... fire everybody and guide BB to its former glory, or at least to be a self sufficient business

Some Facts , Qualcomm $100B market cap has $12B cash, FaceBook $100B market cap has $9B cash and BlackBerry soon will have $4B cash hmmm

So, basically, those in the know are valuing BBRY's net equity value as a going concern or in a sale/breakup at close to nothing.

I think with such a high burn rate, poor product offering, and bad recent track record at new products quickly, it's looking dire.

Of course, that was basically the conclusion of everyone and their brother that looked at them to buy the company. Everyone balked. Even Fairfax.

Posted via CB10


For what do you think the cash is to be used?

I have seen cash gathered as a hedge for a rainy day. But, it's been cats & dogs at BlackBerry for a while and the concern was that the cash on hand would be consumed during a turn-around. In part, this unsustainable operational spending was a justification for the downsizing, I suspect. Is there another shoe to drop?

Cash has been gathered for acquisitions. Is ot possible that there is a remarkable unappreciated corporate bargain that BlackBerry seeks?

New product launches can be spendy. (No need to tell anyone at BlackBerry.) Is there something secret (hardware or software) in the pipeline?

Cash can be used to buy marketshare, too. Do you think that the cash will be used strategically get servers in places where otherwise they couldn't go?

Or, is the cash required as a bridge? Can we assume the turnaround will be more costly than expected?

Posted via CB10

I think BlackBerry can find a niche. First making out of the box secure devices and software is highly saleable to business and government. Second, I like BlackBerry hardware. If the link to android can be perfected, we have a strong alternative to other products. The niche is not "Apple or Samsung" sized, but it can be viable. Overall, bb10 is maturing. Software is coming on stream to satisfy consumers. BlackBerry now needs to find its niche and perfect it. I'm in.

Posted via CB10

I'll tell you what they shouldn't do, or probably won't do:
Payout a dividend
Write down more phones
Spend more on advertising
Shutdown their hardware business
Change OS to android

People suggesting this must be either paid or shorting the stock.

If we compare Apples first two generations of iPhones (and arguably the Z10 and Z30 could be separated into two gens: 10.1 and 10.2) did they get 10 million people onto their market? I think it was around 6 million before the 3g.

What blackberry needs is to use their hardware to differentiate from the competition. If they can accomplish this while improving their current platform they'll succeed in driving up sales.

Posted via CB10

Differentiate the hardware but also add more quality features to the OS. Apart from this, BB still needs to keep creating similarities to the competition. This way, consumers interested in switching to BB won't have to deal too much with a steep learning curve.

Marketing plays a big role in getting the message across:
Show the hardware and apps.
Show the similarities to the competition.
Show the ease of use of OS features like the Hub, peek etc.

But Marketing's primary task needs to be: creating ads for consumers in such a way that 'all the showing' doesn't get overwhelming.

Samsung and iPhone are clearly well established brands.

IPhone 5, Samsung S4 and Z10 are all amazing handsets and powerful. All three have amazing operating systems. The only edge iPhone and Samsung have is the apps which make a smartphone desirable.

Imagine Samsung and iPhone with limited apps? Imagine the ipad with limited apps, they all would be kack!

BlackBerry should use the money to market new handsets and also sort out the apps.

I personally think they should do something with android and keep bb10!!!!

Posted via CB10

So when GE, Apple, Microsoft etc do such shenanigans and pay very little effective tax, or negative tax, this is wrong, although completely legal, but when blackberry does it, stripping the canadian government of much needed funds for schools and roads, police etc, it is somehow a great idea???

Perhaps they should make some more acquisitions - If they can afford it, buy swiftkey since they're in the "keyboard" business. The keyboard, be it digital or physical is such an important part of BB's image.

They could then rebrand Swiftkey to Blackberry Swiftkey so when people download the best keyboard for Android they associate it with BlackBerry. "BlackBerry means the best typing experience --on any platform" (for the whole BlackBerry experience get a real BlackBerry).

--This would fit well with the cross platform strategy that they're pursuing with BBM. Perhaps they could merge Swiftkey with the BBM group to create a Cross Platform BlackBerry division.

Posted via CB10

Lots of "questions" -- not lots of "answers" from the author.

What is their handset division worth?
Will they breakeven?
Which way does the wind blow in Kitchener-Waterloo?
Is posing a statement as a question indeed a question or a statement?

Right now Blackberry looks like Nortel 2006. What you *thought* was a rapidly decelerating company is in fact nothing compared to the deceleration you are *about* to see in the next year.

I just can't understand WHY they needed an extra billion when they already have 3B in the bank. What happening behind the scenes to require this investment that doesn't appear to be needed?

Posted via CB10