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Berkshire Hathaway Inc. Message Board

  • cccpc008 cccpc008 Aug 17, 2013 5:04 PM Flag

    do we think buffet will take a look at a buyout of blackberry?


    im long !!!!!!!!!!!!!!

    Sentiment: Strong Buy

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    • Hi cccpc:

      Mr. Buffett would not be interested in Blackberry for a variety of reasons... He generally is reluctant to invest in an industry that he can't pick the winner. Blackberry is virtually sure to lose the race... they are fighting against Apple, the Google-plex of Android, and Microsoft. Aside from the technological advantages of those three, each of the three also have tens of billions of dollars. It is highly unlikely that Blackberry can turn things around...

      In addition, their equity is in decline... and there Return on Equity (one of Mr. Buffett's favorite measures of management performance) is negative.

      Some might say that Mr. Buffett might find better management--but he does not know many great managers in that area that would be likely turn Blackberry around. Even if he could: In the 1980 shareholder letter, Mr. Buffett explained that an important lesson he has learned is that when leadership with a reputation for brilliance meets a business with a reputation for bad economics, it is the reputation of the business that remains in tact. In other words, he is wary of turn arounds... unless he can personally see how the turn around would work.

      Blackberry is in an industry he does not understand (strike one on his four filters), lacks a durable competitive advantage (strike two on his four filters), does not have proven good management (strike three on his filters)... the only thing going for it could be that it seems cheap... but when you consider that the company's equity is in decline (seemingly becoming less and less valuable each day), it may not even be cheap...


      Sentiment: Buy

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