The Motley Fool

The One Number That Matters to BlackBerry from the Microsoft/Nokia Deal

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.    

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.