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As I put it elsewhere, there's not $4.7B of meat on the corpse. And that seems against the grain of a growth-oriented fund. That's the sort of thing that old-school junk bond funds would do to buy up and part out factories, inventory, and pension funds.

The only justifications I can think of for buying Blackberry are a: to rebuild them, b: to integrate their good tech into an existing system (a good play for an also-ran smart phone that wants more market share and is willing to gamble for Blackberry's old, loyal enterprise market), c: to deliberately put them out of business (a good play for a successful smart phone to either go after the vacuum created by their death, or prevent competitors from exercising plan B).

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Just extrapolating from http://finance.yahoo.com/q?s=BBRY rather than digging in to financial statements: Blackberry has $10 billion in annual sales while losing $200 million.

Is it such a stretch to imagine a buyer killing R&D and investment, and marketing the carcass for enough years of free cash flow to get back the $4.7 billion?

Value investors aren't necessarily growth investors. The margin of error they look for can come from a cheap price.

Blackberry has rapidly declining sales (-50% in 2 years)... you'd have to hope to not just cut costs, but cut them faster (and repeatedly) to stay ahead of the current decline in sales. And you'd have to expect that decline to accelerate if you're cutting back on R&D (and probably facing general brain drain - why would a good mobile engineer keep working for a company in obvious wind-down? Nobody likes to work on an EOL platform.)

In this environment you pay the folks keeping the lights on "just enough"

That works if it's a factory. It doesn't work that well in a mobile device manufacturer. Anyone selling wireless devices is subject to ongoing changes in the regulatory environment, plus security threats. If they don't have a team better than what you get by paying "just enough", bitrot will set in within a year.

I'm sure it will. But the scenario in question is "How do you wind down the beast taking as much cash out as possible?"

It's similar to, "What if AOL just tried to milk the subscriptions instead of blowing all that money?"

It's really, really not similar to AOL.

AOL has an ongoing cash flow from subscription payments. Those payments keep coming from customers until they either quit the service or die off.

Blackberry sells devices. They don't have significant recurring revenue streams - customers have to come back and re-up to a new device every 2-3 years, or they don't get any money. That means as soon as you're no longer offering a competitive product, the revenue stream can dry up very quickly. Especially if carriers and retailers decide you're no longer worth carrying.

Look at the 50% drop they've taken in the past two years. Even if that line just stays constant, you're talking about a decrease of 90% in 6 years total. It's rare than you can scale a tech business down 90% or more and still operate it in any reasonable fashion.

Blackberry just wrote off $900M in unsold devices. That's a much bigger loss.

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