Are Blackberry’s Buyback Plans the Right Move?
In after-hours trading on Thursday, the shares of BlackBerry Ltd. (BBRY, +2.04%) advanced 2.2 percent to close at $10.27 a share. This came after the smartphone maker said that it has approved the repurchase of up to 12 million shares valued at $123.24 million. This represents approximately 2.6 percent of the public float outstanding. According to John Chen, Chief Executive, the purpose of the repurchase program is to offset any dilution that may occur as a result of Blackberry’s equity incentive plan amendments as well as their proposed employee share purchase plan. Year to date until Thursday last week, the shares of Blackberry have declined 6.5 percent compared to a gain of 3.5% on the S&P 500 index (SPX). This decline has come as a result of Blackberry’s inability to raise its software sales. Blackberry’s buyback plans will need to still pass approval and will be presented at the company’s annual general meeting which will take place on the 23rd of June. Blackberry is well known as the developer of their brand of smartphone and tablets as well as the provider of software for mobile device management and industrial applications worldwide. Over the last few months, Blackberry has been struggling against other smartphones in the market and the approval by shareholders of the buyback plan is vital. According to Thomson Reuters, on the 10th of May, Blackberry recorded a free float of 502.8 million shares.
On Monday, the markets in the U.S. were closed for the Memorial Day holiday. Meanwhile on Tuesday, stocks in Hong Kong advanced after a holiday on Monday with the indices catching up to the gains seen in Shanghai on Monday. The Hang Seng Index rose 1.4 percent while the Hang Send China Enterprises, the mainland China tracking, was also up 2.8 percent. On mainland China, after a volatile trading session, the Shanghai Composite Index advanced 0.4%. Meanwhile on Monday, this index rallied 3.4% to hit a new 7-year record high. This came after news was released that China is planning to launch a mutual fund recognition plan between mainland China and Hong Kong in July. This plan will enable the cross-border sale of funds between the two markets. Added to this, on Monday, state media reported that China is currently developing a plan which will change the current national pension fund system. This new plan will enable hundreds of billions of dollars from the fund to be invested in domestic stock markets. The top performing stocks in Hong Kong were China Everbright Ltd., a Chinese broker, which surged 8% while China Merchants Bank Co., Ltd. also advanced 4 percent.
In currency trading on Monday, the U.S. dollar (USD) traded higher in a quiet trading session with markets in the U.S., Germany and the U.K. closed for holidays. This came after data showed that consumer prices in the U.S. rose in April for the 3rd straight month while comments by the Federal Reserve Chairwoman, Janet Yellen, continued to support the greenback. On Friday, the USD gained after data showed that core consumer prices in April rose 0.3% and were also higher on a year over year basis by 1.8%. This marked the biggest increase since October last year. The EUR/USD traded at 1.0969, down 0.40% while the GBP/USD traded at 1.5465, down 0.22 percent. Against the currencies in Canada, Japan and Switzerland, the greenback traded mixed with USD/CAD up 0.24% at 1.2308, USD/JPY steady at 121.50 while the USD/CHF also held steady at 0.9439. Also, the U.S. dollar index was at 96.51, up 0.27%.
On Tuesday, in early morning Asian trade, crude oil prices gained. This came as investors turned their attention to demand prospects after the Federal Reserve chief provided a positive economic assessment last week. WTI crude oil for delivery in July traded at $59.90 a barrel, up 0.17%, on the NYMEX. Meanwhile, overnight on Monday, crude oil futures declined as a result of light trade volumes with the markets closed in the U.S. for the Memorial Day holiday. Also on Monday, Brent crude oil for delivery in July traded at $65.44 a barrel on the ICE Futures Exchange in London.