0.35.
This is the price/revenue figure that Bloomberg reported Microsoft (NASDAQ:MSFT) is paying to buyout Nokia’s (NYSE:NOK) handset unit and license its patent portfolio.
Handset unit? Patent portfolio? Both of these items sound very familiar to those of us following the BlackBerry (TSX:BB, NASDAQ:BBRY) story.
Not only does Microsoft buying Nokia potentially take a buyer off the table as BlackBerry continues to shop itself. It also potentially draws a line in the sand as to what price a buyer might be willing to pay.
For those of you hanging on to BlackBerry shares hoping for it to pop if/when a buyer is found, this number is not a favourable one.
With total revenues over the past 12 months of $11.3 billion, and a current market capitalization of $5.7 billion, BlackBerry currently trades at a price/revenue multiple of 0.50. BlackBerry shares would have to be trading right around $7.50 to carry a multiple of 0.35. That’s about 30% lower than where they currently sit.
The Foolish Bottom Line
Though BlackBerry’s shares are seemingly up on the day because of this MSFT/NOK news, it’s not entirely clear why this is so. One less buyer and a valuation precedent that is lower than where the company currently trades doesn’t seem like positive news to this Fool.
Not all Canadian companies are as volatile as BlackBerry. For a profile of some of the best this country has to offer click here now and download our special FREE report “5 Stocks to Replace Your Canadian Index Fund”. One of the 5 just got taken out a huge premium. Click here now to learn about the other 4, at no charge!
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.
Follow us on Twitter and Facebook for the latest in Foolish investing.
Fool contributor Iain Butler doesn’t own shares of any companies mentioned. The Motley Fool owns shares of Microsoft.
