BlackBerry could burn through a cash pile of $2.6 billion in just six quarters according to a new research note. AllThingsD reports, Bernstein Research analyst Pierre Ferragu sees BlackBerry burning through its cash pile because the company is losing users at an alarming rate. If something does not change, Ferragu thinks the company can burn through its cash in six quarters. That's crazy.
That kind of burn rate will likely be problematic for those counting on the company being sold at $9 per share. Fairfax Financial has placed a bid at $9, but Ferragu thinks that will probably never happen. It sure looks like BlackBerry is worth much less, and that's probably why other suitors are waiting.
“Because the company is losing users at a very high pace, has a stretched working capital and massive off-balance-sheet commitments that will turn into cash burn in the next four quarters, we believe BlackBerry is likely to burn close to $2 billion in the next six quarters on a standalone basis,” Ferragu said in a note to clients. And that, he believes, will lead the company into material liquidity problems.
That kind of burn rate will likely be problematic for those counting on the company being sold at $9 per share. Fairfax Financial has placed a bid at $9, but Ferragu thinks that will probably never happen. It sure looks like BlackBerry is worth much less, and that's probably why other suitors are waiting.