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Instant Analysis: BlackBerry to Boost Share Repurchase Program

By Evan Niu, CFA - Jan 29, 2016 at 12:00PM

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The Canadian mobile specialist more than doubles its share repurchase program in a vote of confidence.

What happened?
Mobile enterprise security specialist BlackBerry (BB -4.49%) has announced that it received approval from the Toronto Stock Exchange to expand its share repurchase program. The number of authorized shares that can be repurchased is now increased from 12 million to 27 million, which represents approximately 5.8% of the public float. BlackBerry has initiated an automatic purchase plan to repurchase 2.7 million shares.

BlackBerry's board believes current prices represent a compelling valuation for the company, so it plans to take advantage of market conditions and repurchase shares. The board does not believe that the repurchase activity will have much impact on Blackberry's cash position.

Does it matter?
At that theoretical maximum and current share prices of around $7, the share repurchase program would add up to approximately $189 million. At the end of last quarter, BlackBerry was sitting on over $2.7 billion in cash and equivalents. So BlackBerry can afford to fund the share repurchase program fairly easily. BlackBerry is now generating positive operating and free cash flow as well.

BlackBerry notes that since the end of June 2015, when the share repurchase program was initiated, it has repurchased and retired 9.9 million shares to date, or 2.1% of the public float. There are likely other things related to the ongoing turnaround that BlackBerry may be better off investing in, but at the same time boosting the repurchase program is also a strong vote of confidence from the board.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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