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It’s Not All Bad for BlackBerry

Don’t get me wrong, there’s a lot of ugly in today’s BlackBerry (TSX:BB,NASDAQ:BBRY) release and we’ll get into this in a subsequent post.  However, before you go flinging your BlackBerry shares off a cliff, there was at least one bright spot to consider that is unlikely to garner much attention.

In BlackBerry’s fiscal 1st quarter, the company’s cash position grew from $2.9 billion at the end of the last quarter to $3.1 billion.  That’s almost $6.00 per share.  In fact, according to Capital IQ, BlackBerry’s pile of cash has never been bigger.  This is not a typical characteristic of a company that is facing imminent death.

Contributing to the cash build was BlackBerry’s solid free cash generation in the quarter.  With operating cash flow of $630 million and capital expenditures of just $83 million, $547 million of free cash was produced.

And this was not an anomaly.  In last year’s first quarter $558 million of free cash was generated and in fiscal 2013, this metric totalled to almost $1.9 billion.  Again, such prodigious free cash flow is not an indication of a company for whom the bell tolls.

Given BlackBerry’s market cap is currently about $5.6 billion (and falling by the second), this ability to produce about $2 billion/year in free cash gives it a free cash yield of an almost unheard of 35%.

Foolish Takeaway

You’re going to read a lot of negatives about BlackBerry today, and tomorrow, and probably for some time.  But as long as the company keeps pumping out free cash, they’re going to be around – in one form or another.  The company may be wounded but at this stage, the wound is not yet life threatening.

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Fool contributor Iain Butler does not own any of the companies mentioned in this report.  The Motley Fool has no position in any stocks mentioned at this time.

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