BlackBerry will burn through most of its cash in the next 18 months, a senior independent analyst has warned, leaving the smartphone maker with "material liquidity problems".
The analysis was published just as efforts to organise an auction of the company appeared to be gaining momentum. Cerberus, the distressed asset specialist, was on Wednesday reported to have asked to see BlackBerry's accounts in order to gather the information needed for a bid.
A rapidly deteriorating cash position would dent hopes of a sale, because private equity buyers will raise funds by borrowing against BlackBerry's savings plus a sale of its intellectual property.
"Our detailed analysis of the recent filing of BlackBerry reveals a cash position far worse than we modelled," wrote Ferragu in a note. "We believe BlackBerry is likely to burn close to
The analyst revised his numbers after BlackBerry filed its second quarter results this week. The downbeat assessment was based on a faster than expected fall in service revenues from users, with a forecast that the company will lose 7 million subscribers in the next quarter, combined with higher than expected spend on patent licences.
"We now believe there is virtually no collateral for a bank loan, and no credible story for a break up to justify more than a couple of billions for the equity," said Ferragu.
Cerberus, whose interest was first reported by the
Heins launched a new generation of BlackBerry phones in January, but the innovation left consumers cold. While many BlackBerry loyalists still prefer its physical keyboard to touchscreen machines, developers have not embraced the new BB10 devices, meaning many popular games, social and media applications are not available on the phones.
In 2011, BlackBerry still accounted for 14% of all smartphone sales worldwide, but according to industry analyst IDC its share had fallen to 3% by the second quarter of this year.
A spokesman for BlackBerry said: "We do not intend to disclose further developments with respect to the process until we approve a specific transaction or otherwise conclude the review of strategic alternatives."
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