There have recently been rumors that a potential takeover of BlackBerry could occur in the short to medium term, meaning some investors are piling in on the stock to make a quick return if there is a takeover bid. This inevitably increases share price, which makes it look like quite an interesting stock. However, there has been no confirmation as yet that there will be a takeover, so the probability is that it’s a rumor for the benefit of investing for the long term.
It's also extremely unlikely that growth in the 'developed countries' will be excessively high as tough competition will make market share growth extremely low. With this said, it's important to look at emerging markets to see what kind of operations BlackBerry has in place. It's important to highlight the countries that are currently shifting from traditional mobile phones to smartphones. Countries trading in BlackBerry are: Africa, India and Latin America. However, India, which is the second largest country based on population, has posed some problems for mobile phone manufacturers, including BlackBerry and Apple. An interesting fact to point out is that BlackBerry’s market share in India shrunk from 12.8% in 2010 to 5.9% in 2012, whilst in the same time period Samsung's market share increased from 4.9% to 42.5%. Apple's market share is also around 5%.
BlackBerry has also received an order for one million BlackBerry 10s. News is still vague as to precisely who has ordered this number but it certainly is a large order by BlackBerry’s standard. It comes after a period where thousands of BlackBerry employees were laid off and huge losses accumulated, so there is fresh speculation that this order could be the first sign of a BlackBerry turnaround. It's also believed that BlackBerry has produced software that will allow Apple and Android consumers to access their BlackBerry data on their tablets. This could be beneficial as it means consumers will not have to set up a secure network themselves--it's already integrated within the products.
Talking about these 'accumulated losses', it's now time to look at BlackBerry’s financials. They appear to do quarterly accounting statements instead of a yearly one. In the nine months ending Dec. 1, 2012, BlackBerry had sales of $8.4 billion while making a 28.1% gross profit. However, they managed to make a loss of $744 million. Sales have decreased by $6 billion since the previous year with gross profit losing 8% and net profit losing $2 billion. This greatly emphasizes the need for a 'turnaround.' Samsung had sales in excess of $129 billion for the same time period during 2012, with an increase of $24 billion from the previous year, bearing in mind Samsung's sales aren't just from mobile phones. They made a gross profit of 36.5% in 2012, up from 31.5% in 2011. They made a net profit of $15 billion in 2012, up from $8.7 billion in 2011. Apple made sales of $156.5 billion in 2012, with $80.5 billion associated with the iPhone, up $48 billion and $33 billion respectively from the year before. They made a 43.9% gross profit, up 3.4% from the previous year. Their net profit for 2012 was $41.7 billion, up $15.8 billion from the year before.
In terms of assets and liabilities, BlackBerry has $12.6 billion of assets with a decrease of $1 billion with total liabilities of $3.3 billion, down by $0.3 billion. Samsung’s total assets were $158 billion in 2012, up by $17.9 billion with total liabilities of $53.8 billion, up by $5.8 billion. Apple has total assets of $176 billion, up by $60 billion with total liabilities of $57.8 billion, up by $18.1 billion.
If we ignore the rumors of a potential takeover for a moment, in terms of operation and financials, BlackBerry is a small scale business that is more secure than most small businesses but still with potential for growth. However, with the losses, a decrease in assets and struggling operations in India, if there is any growth to be made it won't be for a while. This is why, I would rate this stock as HOLD until the speculation of a takeover has dispersed. If this speculation of a takeover comes true, there could be potential for short term gains so if you're a big investor willing to take that risk, this could potentially be a BUY with the HOLD still in place for small investors. I personally however, would still HOLD until this speculation has been confirmed and a takeover is certain.