On September 30th 2013, the Globe and Mail questions “whether Fairfax can raise the money… to whether BlackBerry is worth that much to begin with”.
The worth of a company is critical to companies such as BlackBerry, guiding investors such as Fairfax in their decision making procces. Static valuation includes the use of balance sheets, current value of assets to illustrate its liquidation value. According to the Financial Times, BlackBerry has “a collection of patents that could be worth US$2 billion to $3 billion. These factors of valuation don’t give a full picture of the value of BlackBerry to a future investor. It demonstrates the importance of looking at the value of a company from a forward looking approach including technical and fundamental value.
- Technical Value: market place value
- Fundamental Value: expected rate of growth, degree of risk
In the case of Blackberry, the technichal value is $4.7 billion (US) as that is what Fairfax is willing to pay for the company. The Fundamental value is constantly changing as share prices fluctuate, positive/negative media rises and suspense over the future of blackberry heightens. This article illustrates the application of valuation and its fundamentality in the business world.