BlackBerry Ltd (BBRY): The Big Question Investors Should Ask

Category: Markets / Finance / Nov 04, 2013 4:20PM EDT

BlackBerry Limited (NASDAQ: BBRY) shares tumbled over 16 percent on Monday after the struggling smartphone maker announced it is abandoning a plan to sell itself and will replace CEO Thorsten Heins.

"Well clearly the big question is what's that underlying value and is that value better in pieces? What are those pieces? And with Ibanks looking at this for over a year and a half and no one’s really stepping forward, I tend to think that going private is really not an option,” said Joseph Greco, managing director with brokerage firm Meridian Equity Partners Inc. “It's kind of more being sold to whoever's going to pay a price, and that price literally could just be a price.”

In addition, Fairfax Holdings, BlackBerry's largest shareholder, abandoned its $4.7 billion buyout of the smartphone maker and is instead investing $1 billion as part of a revised investment proposal.

"Today's announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors," said Barbara Stymiest, Chair of BlackBerry's Board. "The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders. This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position. Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs."

Thorsten Heins will step down as Chief Executive Officer at closing and John Chen will be appointed Executive Chair of BlackBerry’s Board of Directors and serve as Interim Chief Executive Officer pending completion of a search for a new CEO.

“We've seen this stock just get shredded and clearly here today on that news it seems like it's pushing the stock price lower, but in reality it should pave the way for perhaps leadership that's a little bit more agreeable to terms that are realistic with what the market will bare,” Greco added. “At this point in time, it's very unrealistic to expect something in the double digits for that company, whether as a whole or a part.”

Initially after the news, shares of the smartphone maker were temporarily halted in pre-market trading after tumbling over 18 percent.

On Monday, shares of BlackBerry plunged 16.47 percent to close the session at $6.49.