TheChek News Flow

Gapping down

In reaction to disappointing earnings/guidance: HTCH -19.4%, ESIO -19% (ticking lower; also downgraded to Hold from Buy at Needham ), BODY -17.8%, ELLI -17.6% (also announced that it has signed a definitive agreement to acquire MortgageCEO), OPLK -7.9%, (light volume), RBS -6.6%, AIG -4.7% (also AIG downgraded to Hold from Buy at Drexel Hamilton ), SSNC -4.5% (light volume), FLR -3.3%, PNY -1.2%, (light volume), AXL -1%, (light volume), CBOE -0.4%, (light volume), KOG -0.2%.

Select financial related names showing weakness: IRE -2.5%, AEG -2%, BCS -1.8%, SAN -1.1%, DB -1.1%, CS -0.9%, HBC -0.4%.

Select metals/mining stocks trading lower: ABX -4.6% (confirms plan to reduce debt launches $3.0 bln public equity offering), GFI -2.2%, IAG -2%, GG -1.3%, GDX -1.1%, RIO -0.8%, GLD -0.6%, SLV -0.2%.

A few oil/gas related names showing modest weakness: PBR -1.4%, TOT -1.1%, E -1.1%.

A few European drug names are lower: SNY -0.9% (ticking lower), GSK -0.9%, AZN -0.7%

Other news: APAM -5.5% ( prices 4.8 mln shares of common stock at $56.00), ARNA -4.1% (partner Eisai reported earnings/update), TOWR -3.4% (announces offering of ~2.58 mln shares of common stock by Tower International Holdings), CNHI -2.8% (still checking), RYAAY -2.4% (still checking), WDC -2.3% (prices secondary offering of 10,869,566 shares of common stock by selling share holder Hitachi at $67.00 per share), BUD -1.4% (reported earnings yesterday), PEB -1.3% (announces public offering of 2,200,000 common shares), UN -1.3% (still checking), LYB -0.8% (announces offering of 15 million ordinary shares by selling shareholders) .

Analyst comments: VRTX -2.2% (downgraded to Market Perform at Bernstein), SNE -1.4% (downgraded to Hold from Buy at Jefferies), PETM -0.9% (downgraded to Neutral from Buy at BofA), OCN -0.4% (downgraded to Market Perform from Outperform at Wells Fargo), WTW -0.2% (downgraded to Equal Weight from Overweight at Barclays)

Gapping up

In reaction to strong earnings/guidance: DRAD +15.6%, GDOT +14.6% (also Green Dot and Walmart expanded Walmart MoneyCard portfolio with a suite of prepaid debit cards), FSLR +7.7% (also announced that it has signed a definitive agreement to acquire MortgageCEO ), CALD +6.3%, TRMB +5.2%, CTRL +4.1%, (light volume), MSG +3.3%, (light volume), AHS +3.2%, (light volume), MHK +2.7%, SWN +2.1% (also upgraded to Buy at Stifel).

M&A related: BBRY +0.9% (FT reviews continued options for sale of Blackberry (BBRY) has time runs out).

Select solar names showing strength following FSLR results: RSOL +5.7%, CSUN +3.7%, YGE +3.3%, TSL +2.9%, SUNE +2.9%, CSIQ +2.6%, TAN +2.5%, LDK +2.2%, SCTY +2.2%, HSOL +2.1%, SOL +2.1%, JKS +1.9%, STP +1.4%, SPWR +1%, JASO +0.6%.

Other news: FRO +9.4% (still checking), OXBT +8.6% (continued momentum), CETV +4.2% (continuing to rebound), NQ +3.1% (still checking), JCP 2.7% (looking around), GTAT +2% (still checking), STWD +1.2% ( announces spin-off of single-family residential business), HAR +0.4% (modestly higher following exec interview on MadMoney), XOM +0.3% (following positive Barron's mention), .

Analyst comments: ALU +1.8% (upgraded to Hold from Sell at Societe Generale ), NFLX +1.1% (upgraded to Outperform at Robert W. Baird; tgt raised to $420; still room to run ), VALE +1% ( upgraded to Buy at Stifel; tgt $20), NMM +0.8% (upgraded to Buy from Neutral at Global Hunter, upgraded to Buy at Stifel)

Fed's Plosser (hawk, non-voter): I still do not believe that QE is very effective; fine tuning QE will be a very difficult thing to accomplish - CNBC - Fed clearly missed opportunity to taper in September. - FOMC operates on a consensus basis. - Fed can do very little about the near-term situation. - Fed is having a hard time communicating about its balance sheet tool and "disentangling" it from its interest rate tool.

Carrefour a Potential Buyout, EU37 Exit Price: Espirito Santo

Majority shareholder Colony Capital (20% voting rights) may eventually proceed with a Brazil IPO, it would be difficult sell Carrefour outright given current size, Espirito Santo analyst Ric Thakrar says. Espirito Santo sees scenario where Brazil IPO would generate EU12-shr in value, resulting Carrefour stub could be bought by private equity at EU25-shr, generate 20% IRR With capex guidance conservative, Brazil IPO may eventually make potential stub manageable, interesting buyout target as Colony starts its 7th year in 7-10 yr planned investment in Carrefour: Espirito Santo Rates buy, FV raised to EU30 vs EU25 Oct. 24: Carrefour Hires Itau BBA, CS for Brazil IPO: Exame

Europe moves nearer Japan-syle deflation trap with shock price falls Ambrose Evans-Pritchard

ECB warned it must take immediate and pre-emptive action to head off he risk of full-blown deflation by next year.

All key measures of eurozone inflation fell dramatically in October, stunning the markets and leaving the region dangerously close to a Japan-style deflation trap. Consumer price inflation (CPI) plunged from 1.1pc to 0.7pc, the lowest since the financial crash in 2008-2009. “This is a massive downward surprise,” said Gizem Kara from BNP Paribas. A string of debt-crippled states are now sliding into deflation, with Italy buckling over the late summer. The underlying rate is even lower once austerity-linked tax rises are stripped out The shock data came as EMU-wide unemployment jumped to a record 12.2pc in September, with a further 74,000 people losing their jobs. Youth jobless rates reached 40.2pc in Italy, 57.6pc in Greece and 56.6pc in Spain. “This is playing out in a very similar way to Japan in the early 1990s,” said Albert Edwards from Societe Generale. “All it needs now is an unexpected recession and Europe will slide into outright deflation. The risk is a trade shock from Asia. That is when the markets will start to panic."

The euro tumbled a cent to below $1.36 against the dollar as investors began to price in a quarter-point rate cut by the European Central Bank as soon as December. A former ECB governor said the bank’s passive stance over the past few months was a “disaster” for Italy and Spain. The time-lag effects mean that serious damage has already been done. “It is incredible that they have missed their 2pc target by so much. This risks driving the periphery into protracted depression and could destroy the eurozone. Credit conditions are far too tight. The ECB should cut rates to zero, extend thee-year financing for banks and relax collateral rules,” he told The Telegraph. “What scares me is that the ECB seems to be formulating policy for Germany without any regard for everybody else. It has been captured by Germany. What is so bizarre is that the old Bundesbank would not have let this happen,” he said. Even German inflation is at a three-year low of 1.4pc. Prices fell 0.4pc in Bavaria and 0.3pc in Saxony in October. While the Bundesbank has been fretting about a local house price boom, the average rise in property has been less than 3pc over the past three years. Julian Callow from Barclays said the fall in the eurozone’s core inflation rate (without energy and food) to 0.8pc is evidence of powerful forces at work in the world economy. “China’s fixed capital investment reached $4 trillion last year. The sheer scale of this is leading to huge over-capacity in manufacturing and is transmitting a deflationary impulse through the global system,” he said. “The ECB has to be very alive to the risks. Its treaty mandate is to support the 'general economic interests of the Union'. This means giving equal weight to jobs as the US Federal Reserve is doing.” Mr Callow said the failure to act is allowing the euro to punch too high against the dollar, yuan and yen, exacerbating the deflationary effects and tightening the screw for struggling exporters in Southern Europe. The Bank of Japan has succeeded in driving down the yen with a blitz of monetary stimulus. A report by the Bruegel think-tank in Brussels said the slide towards deflation may push Italy and Spain into a “runaway debt trajectory”. It lowers nominal GDP growth, causing debt costs to rise faster than the economic base, the “denominator effect”. Bruegel said each one percentage point fall in inflation forces Italy to increase its primary budget surplus by an extra 1.3pc of GDP to stabilise debt. Italy is already targeting a sustained surplus of 5pc, a feat that no country except oil-rich Norway has pulled off in half a century. The latest inflation data show Italy’s CPI rate fell by 0.3pc in both September and October, despite a rise in VAT taxes that should have pushed it higher. Over the past three months, France, Italy, Spain, Portugal, Greece, Cyprus, Ireland, Slovakia, Slovenia, Estonia and Latvia have all seen price falls once extra taxes are stripped out. It is a similar pattern in Bulgaria, Romania, Hungary and the Czech Republic, with Poland and Denmark close behind. The entire region risks sliding into a deflation trap if recovery falters. Hans Redeker from Morgan Stanley said the “Japanisation effect” in Europe is having perverse effects. The fall in inflation is automatically raising real interest rates, tightening the vice further in a vicious circle. “Deflation accidents usually happen when things seem cosy for while and central banks do nothing. Europe is now in a deflationary equilibrium but this could turn bad if there is any outside shock. We think this could come from Asia, probably a credit squeeze by China’s central bank,” he said. “Japan was able to cope with deflation in the 1990s because it had a positive global income flows of 3pc of GDP. Europe does not have that advantage. The flows are negative,” he said. Morgan Stanley said the ECB must take immediate and pre-emptive action to head off he risk of full-blown deflation by next year. Japan’s travails over the past 20 years show that is very hard to shake off the virus once it becomes lodged in the system.

Morgan Stanley delivered a sooty lump of coal to apparel retailers on Thursday, via a grim forecast for the current holiday season. Softlines sales are expected to ring up a meager 1.6 percent same-store sales gain in the fourth quarter, the worst performance since 2008. That figure is 190 basis points below last year’s 3.5 percent increase and 220 basis points below the four-year average from 2009 to 2012.

The estimate was the most pessimistic of the major holiday forecasts from organizations like the National Retail Federation and ShopperTrak, which published earlier estimates of sales increases of 3.9 percent and 2.4 percent, respectively, for the season. Each study analyzed a different universe of retail channels and companies.

In another dim projection, Customer Growth Partners, of New Canaan, Conn., forecast 2.9 percent growth in holiday spending, the slowest pace since the recession. Apparel sales are predicted to lag the overall trend and increase just 2.6 percent in that study, down from a 4.2 percent expansion last year. E-commerce revenues are included in those figures.

The Morgan Stanley report — from analysts Kimberly Greenberger, Scott Devitt and Jay Sole, along with economist Ellen Zentner — encompasses specialty retailers and department stores in its calculations. It excludes J.C. Penney, due to its dismal 31.7 percent comp decline last year during its ill-fated attempts at a makeover.

Unlike last year, J.C. Penney is expected to be aggressively promotional this holiday in order to boost its top line, forcing other retailers to follow suit, with a potential negative impact on margins. “We predict JCP will offer extremely deep discounts early in the season to ensure it achieves its positive comp guidance, putting pressure on other retailers to do the same,” wrote the Morgan Stanley analysts. “With JCP’s equity offering in late September, the company essentially promised investors a positive fourth-quarter comp.”

Among the projected winners in this landscape are Internet giant Amazon, luxury brand Michael Kors, off-price retailer Ross Stores Inc., Victoria’s Secret owner L Brands Inc. and digital coupon marketplace RetailMeNot.

“We expect Kors to deliver the single best sales growth in retail this holiday in the specialty store sector, as women continue to shift some of their apparel budget to accessories. In this environment, Michael Kors appears best positioned within the category and far less prone to discounting,” wrote the analysts.

There are six fewer shopping days between Thanksgiving and Christmas this year, which could lead retailers to bank on early and heavy discounting to drive sales. Store checks by Morgan Stanley show softlines retailers have been about 20 percent more promotional in the third quarter compared with a year ago — and promotions will deepen in November and December.

The report forecast flat or rising gross margins at only five companies: Ann Inc., Express, The Children’s Place, Michael Kors and Urban Outfitters Inc.

Off-price retailers, such as Ross Stores, are projected to continue taking market share from midtier department stores. “Consumers increasingly prefer the off-price better-brands-at-lower-prices value proposition over midtier department stores’ better shopping experience, especially when gift giving,” wrote the analysts.

In department stores, the center-core categories of handbags, shoes, accessories and cosmetics are driving sales. Stores with well-executed center-core strategies, such as Macy’s Inc. and Nordstrom Inc., are expected to outperform Kohl’s Corp. and J.C. Penney Co. Inc.

Among young adults, Morgan Stanley sees shopping behaviors favoring fast-fashion chains like Forever 21, H&M and Zara at the expense of traditional teen retailers such as American Eagle Outfitters, Abercrombie & Fitch and Aéropostale.

Apparel retailers have been negatively impacted by the shift in consumer spending toward durables like autos, home improvement and appliances, a trend Morgan Stanley sees continuing into 2014. Auto sales are on pace to increase 11 percent this year, for example.

Customer Growth Partners sees promotional activity negatively impacting apparel retailers, predicting a more than 5 percent decline in operating income per square foot. “For retailers, particularly those dependent on healthy discretionary spending, this will be the most challenging holiday since the recession, and more so for those who placed their holiday orders earlier in the year, when sales were healthy,” said Craig Johnson, president of CPG.

He attributed much of the softness to the weakness of the employment picture. “Households with full-time jobs spend against both needs and wants, but consumers with part-time jobs spend only against needs,” he said. Real disposable income, he added, has risen less than 1 percent in recent months, less than one-fifth the rate it did during the years prior to the recession.

The amount of media and market attention focused on whether the Federal Reserve will taper its quantitative easing (QE) would border on comical if it weren’t so serious. In August, the San Francisco Fed published an economic research paper that estimated that the $600 billion spent on QE2 added a meager 0.13% to real GDP growth in late 2010 (about $20 billion) and that the benefit fades after two years. Given that, what practical difference does it make whether the Fed buys a monthly $85 billion or $75 billion or no additional securities at all for that matter? We maintain that excessively easy monetary policy is actually thwarting the recovery. But even if there is some trivial short-term benefit to QE, policy makers should be focusing on the longerterm perils of QE that are likely far more important. Here are some questions that come to mind: No one is sure what the Fed is focused on. After spending several months bracing the market for fewer QE donuts, the Fed decided that it was premature to taper. Even a token reduction (from a baker’s dozen to a dozen?) was ruled out despite the fact that the economic trajectory has not materially changed. We responded the next morning with our own stimulus by ordering jelly donuts for the entire office.

You don’t have to go door to door to find dismal news about Avon (AVP) today. Between the stock tanking over 20% and the company’s announcements of a weak third-quarter topped with news that federal regulators are increasing the penalties to resolve its ongoing bribery probe, it’s one ugly afternoon for the beauty product and cosmetics company.

The Wall Street Journal’s Serena Ng and Anna Prior recapped Avon’s woes nicely this afternoon:

The government’s position, disclosed by Avon in a regulatory filing, adds another big weight on a company already struggling to turn around a string of poor results. On Thursday, the door-to-door seller of makeup and consumer products reported a third-quarter loss following a steep drop in sales in the U.S. and China.

Regarding the bribery probe, the WSJ writes:

Avon has been trying to resolve a federal bribery probe that has dogged it since 2008 and has already racked up roughly $340 million in legal and related costs. The company is in talks with the Securities and Exchange Commission and Justice Department to settle an investigation into whether Avon breached the Foreign Corrupt Practices Act by providing gifts or making payments to officials in China and other countries to get licenses to sell its products.

Analysts were mixed-to-negative in reaction to the news, revising their recommendations and slashing price targets. Rommel Dionisio of Wedbush, for one, cut the price target to $21 from $24, writing:

Avon reported third-quarter revenue of $2.323 billion and adjusted earnings-per-share of 14 cents, again short of consensus forecasts of $2.443 billion and 19 cents, respectively. Overall local currency sales fell 1%, sequentially worse than the 2% growth seen in the second quarter, as sharp declines in North America (18%) and Asia-Pacific (19%) were partially offset by growth in Latin America (6%).

We believe shares of Avon should trade at a 5%-10% discount to the peer group average. Such a discount implies a 2014 estimated price-to-earnings multiple of 17 times.

Wendy Nicholson of Citigroup considers the news to be a “step back,” noting that it will “put Avon back under a cloud of investor anxiety for some time.”

Despite the grim outlook, one analyst foresees possibility. Ronnie Moas of Standpoint upgraded Avon to Buy, advising, “The upside is 28% looking out two years and that is probably double what the market will register. You can buy Avon now or wait until after the next good quarter.”

UPDATE: It’s been a bad day for multilevel marketers. Not only has Avon dropped 24% to $17.11 at 3:27 p.m., Herbalife (HLF) has fallen 3.4% to $64.91 after CNBC reported that hedge-fund manager William Ackman would release new information on the nutritional-supplement company next month.

Valeant Pharmaceuticals: Stock Could Climb 42%

Valeant is taking over profitable market niches that its mega-cap competitors ignore.

Hefty research and development expenses, patent cliffs, and slow growth levels are well-known knocks against big pharmaceutical companies. They're all problems that Valeant Pharmaceuticals International (ticker: VRX) doesn't have. Over the past five years CEO Michael Pearson has transformed the specialty pharmaceutical company with a series of savvy acquisitions, diversifying its product mix to lower patent and approval risk, and expanding in fast-growing emerging markets. Yet investors can still buy the stock for about 12 times forward earnings—on par or cheaper than other big drug makers. "We first bought Valeant in early June and we're still buying it," says John Maloney, chief executive of M&R Capital Management. "They have a very broad product portfolio with steady organic growth and limited risk: Their biggest product is only 3% of revenue, so patent cliffs aren't a problem, and 75% of their revenues don't involve government reimbursement, [which can] change over time."

Maloney sees the company earning around $11.50 in 2016, even without any future acquisitions. "Just using the forward earnings multiple now, that would get you a $150 stock in two years." Shares closed Thursday at $105.72.

Goldman Sachs is also impressed. Analyst Gary Nachman recently added the company to his Conviction Buy List with a 12-month price target of $130, or 13.7 times his 2014 adjusted earnings-per-share estimate of $9.47. "Even without future M&A, we expect that Valeant will continue to be a 'beat and raise' story, and that could be largely driven by synergies from recent deals coming in ahead of expectations."

The stock shed 2.5% Thursday in response to third-quarter earnings—Valeant reported a loss of $973.2 million, reflecting restructuring and legal charges. Yet the dip looks like a buying opportunity, as the major charges were one-time in nature, and the company's EPS otherwise exceeded expectations. Costs surrounding its $8.7 billion acquisition of eye-care firm Bausch + Lomb are nonrecurring, and Valeant increased its synergies estimate for the deal. In addition, its $142.5 million litigation settlement with Anacor Pharmaceuticals (ANAC) was smaller than that company had expected, and does not include ongoing royalty payments or an injunction to stall Valeant's product launches.

Valeant closed the Bausch + Lomb deal in August, and estimates $850 million in cost reductions. While that deal was bigger than most, it typifies Pearson's strategy of making accretive acquisitions and targeting products with healthy margins in areas that have been neglected by bigger pharmaceutical companies, from dermatology to ophthalmology and branded generics. This rollup strategy has allowed it to boost its earnings power and diversify its revenue stream.

BMO Capital Markets analyst Alex Arfaei says that a recent decision by Merck (MRK) to refocus on its top 10 geographic markets is a positive for Valeant. "The businesses that Merck is going to divest are in Valeant's markets," he says. "Not only will [Valeant] have less competition, but at least some products could be available for purchase."

Arfaei isn't concerned about the debt that Valeant has accrued during its purchases. Valeant has just under $11 billion in debt now, against a little more than $2.5 billion in cash. He says the company generates an impressive amount of cash that allows it to bring down leverage quickly and that its cost structure—lower taxes and R&D expenses—means that "every dollar of revenue is more profitable for Valeant than Merck," so it can afford to make bids for upcoming opportunities.

Valeant's U.S. prescription dermatology business is one of its best acquisition success stories—it moved from being the 11th largest player in 2008 to the market leader, with sales 50% higher than its closest competitor. Its branded generics business, in which it creates brand names for generic drugs that can still sell at reduced price points, is growing rapidly in Latin America and Eastern Europe.

Insiders appear confident about the company's prospects: Pearson owns nearly 2% of the shares outstanding, and during a five-week period beginning in mid-August, five insiders purchased more than $6.7 million in stock. The purchases came even as the stock was at multiyear highs and the health-care sector in general was slightly skewed toward executive selling, according to InsiderScore, which classified the moves as "an unusually aggressive buying streak."

To be sure, it's not a foolproof stock. Like any drug company, Valeant could suffer if drugs in its pipeline aren't approved by the Food and Drug Administration, and its bevy of end markets means that foreign exchange can take a bite out of the bottom line. Many investors may be put off by the debt load.

Still, Valeant is aiming to bring down its debt meaningfully in the next few years, helped by its strong cash position. The company is so well diversified that bad news for one of its products doesn't spell disaster.

"We think there's a lot of upside left," says M&R Capital's Maloney.

When Prem Watsa, chief executive of Fairfax Financial, made a tentative $4.7bn cash offer to take BlackBerry private, he set in motion a countdown that runs out on Monday. That is the deadline BlackBerry, the struggling Canadian smartphone maker, set for Mr Watsa to complete his due diligence and make a definitive offer, and for other potential bidders – including BlackBerry’s founders Mike Lazaridis and Douglas Fregin – to “step up, or shut up”.

The two men, who are said to be concerned that BlackBerry might be broken up, disclosed their interest in a recent filing with the US Securities and Exchange Commission and hired Goldman Sachs and Centerview to review their options. Together they hold an 8 per cent stake in BlackBerry and are said to have funding offers from several separate sources. People close to the two men say that they are yet to decide whether to make a formal offer for BlackBerry, or perhaps team up with Prem Watsa on a joint bid. Mr Lazaridis, the technical wizard behind the original BlackBerry handsets, was co-chief executive of the company until the end of February last year when he and Jim Balsillie stepped aside to make way for Thorsten Heins, BlackBerry’s current chief executive. People close to the discussions note that even if the Fairfax offer turns into a definitive agreement, the new owners would still need someone to run the company – a job Mr Lazaridis might be willing to resume in order “to save his baby.” In the meantime, BlackBerry’s share price has remained below the $9-a-share price tentatively offered by Fairfax. This reflects investors’ doubts about whether the Fairfax deal will be consummated, and whether any other bidders will emerge. As part of the tentative agreement between BlackBerry and the Fairfax-led consortium, Fairfax was given six weeks to conduct due diligence, while Fairfax agreed to a “go shop” clause under which BlackBerry has been permitted to “actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals”.

But the break clause in the tentative deal was lopsided. Whereas BlackBerry agreed to pay a break-up fee of at least $160m if a better offer materialised, Fairfax could walk away for free. Some analysts including Pierre Ferragu of Bernstein Research have expressed doubts about the likelihood of the Fairfax deal closing because Mr Watsa has yet to provide any details of the other members of his consortium, or his funding sources. Mr Ferragu told his clients last month that the proposed Fairfax deal was “unlikely to close” while noting that “of the total $4.7bn required in the transaction, Fairfax is not committing any more than it already had when it increased its equity stake last January to about $480m total.” Mr Watsa however says that he remains committed to the deal. In an interview with the Associated Press in late September, he emphasised that Fairfax was not in the business of making an offer and then walking away or redoing the deal. “We’ve got a record of 28 years of completing what we’ve done. We’ve never renegotiated,” Mr Watsa said. “We thought long and hard before we offered $9 a share and we’re not in the business of offering a number and at the last minute changing the figure. Over 28 years our reputation is stellar on that front. We just don’t do that.” Mr Watsa has since declined to comment further. Nevertheless, since the Fairfax bid was announced there has been a steady stream of speculation about other potential bidders. The companies that have been mentioned include IBM, Microsoft, Samsung, Lenovo, Google, Cisco, SAP, Amazon and most recently Facebook. Most have declined to comment on the “rumours and speculation” although SAP’s finance chief appeared to rule out his company in comments he made 10 days ago. Microsoft, which is acquiring Nokia; Samsung; Lenovo; and Google through its Motorola unit all have existing smartphone operations and could benefit directly from BlackBerry’s existing technology. Samsung and Lenovo, in particular, could use the new BlackBerry 10 operating system to cut their dependence on the Android operating system supplied by their partner and rival, Google. However, a bid by either company would have to be approved by Canada’s government and security agencies, which might object in particular to Lenovo, which is headquartered in China. IBM and Cisco have both been mentioned as possible bidders because of their interest in BlackBerry’s secure services for business customers, including its new mobile management software that enables corporate IT chiefs to manage not only company BlackBerrys but other manufacturers’ handsets that employees bring to work. In spite of the rumours, most analysts doubt whether any “trade” or purely financial buyer such as a hedge fund would be interested in acquiring the whole of BlackBerry, particularly while it is in the midst of such a radical restructuring. They do however believe that some of the big tech companies mentioned could be interested either in parts of BlackBerry – for example its secure private data network and BBM messenger service – or in its extensive patent portfolio, which some analysts suggest could be worth between $1bn and $3bn. Some potential bidders including Cerberus Capital Management, a private equity group that specialises in acquiring distressed assets, have signed non-disclosure agreements with BlackBerry in order to obtain access to the company’s accounts. But so far none have confirmed their interest. John Sculley, Apple’s ex-chief executive, has also been mentioned as a potential bidder along with unnamed Canadian investors, although few insiders give much credence to that suggestion given Mr Sculley’s chequered history. Mr Sculley ran Apple for a decade before Steve Jobs returned to the company in 1993 and pushed him out. Mr Sculley himself has declined to comment on reports of his interest. One way or another, it should become clear next week whether BlackBerry has a future as an independent handset maker battling for a slice of a global smartphone market that IDC, the market research firm, estimates will grow 40 per cent to more than 1bn units this year, or be broken up and sold. BlackBerry still has about $2.6bn in cash reserves, but with the company burning through an estimated $500m in cash per quarter, the clock is ticking