BlackBerry: don't bet on a frothy, "quick auction"

News report: BlackBerry Ltd. has already held talks with potential bidders in what it hopes will be a quick auction (WSJ)

It was only a few weeks ago when I sold my personal RIM shares following a month with the underwhelming BlackBerry Q10. My “canary in the coal mine” blog post about why selling my stock caused quite the ruckus with the “longs” (see prior posts “Throwing in the towel on my RIM shares” June 24-13 and “Throwing in the towel on my RIM shares part 2” June 26-13). At that time, BlackBerry CEO Thorsten Heins was incredibly positive about the channel takeup of the Q10. I wasn’t so sure that could be true, based upon my own heartfelt experience with the much-anticipated handset. The longs over at Seeking Alpha were sure I was a tool of NY hedge funds who were short the stock, and gave me both barrels for my “stupidity” to sell for a loss at $14.60, right before RIM’s quarterly results were going to be released. The results and guidance were crappy, and the stock fell to below $10.

A few weeks later, the company was up for sale. The channel didn’t like the product, the BlackBerry Board couldn’t ignore the feedback, and I’d say my experience was indicative. Much like a Hollywood movie, if the buzz is bad, your neighbours don’t head out to see the show and the curtains are quick to come down.

According to the Journal this am (which continues to provide fabulous coverage on the company’s travails), the sale is going to be a quick one. I’d caution investors who bid up BBRY shares another 3% this am on that storyline, since every motivated seller hopes for a quick sale. It’s not that the journo got the story wrong, I’m just not sure his source can control the outcome.

When you are trying to sell a company with some alacrity, the longer it takes the lower the price usually goes. Since time doesn’t appear to be on BlackBerry’s side, and some enterprise customers are holding off their 9900 Bold-Q10 upgrade until they see how this all plays out, its only natural that BBRY’s investment bankers are pushing for an early September deal.

I’d have thought that Microsoft (MSFT:Q) was a candidate for the data room, but their play for Nokia’s handset business earlier this week can’t be good for BlackBerry’s auction dynamic. Particularly if both Samsung and Silver Lake are being sincere when they say they’re not interested. Oh for the days when Analyst Peter Misek, now of Jefferies, tried to convince the TV world that “Microsoft had a standing $50 offer” for RIM. That leaves China (Lenovo), Facebook, Amazon, and price-sensitive PE turnaround artists such as Gores Group and perhaps a few stray cats to burn the midnight oil in the dataroom.

Canaccord Genuity, which already had a sell on the stock and an US$8 target, lowered its BBRY estimates this morning based upon “soft BB7 and B10 sales and high channel inventory levels”.

Even though the For Sale sign is finally up, I’m not sorry to miss this final, sad chapter. The epilogue on RIM will take some considerable reflection, no matter who ultimately buys one of Canada’s greatest contributions to the world of innovation.

MRM