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BlackBerry's funds slowly bleeding out

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November 5
11:54 AM 2013

Beleaguered smartphone maker BlackBerry had planned to issue convertible notes worth USD1 billion after the collapse of its Fairfax Financial Holdings bid. The effort was supposed to provide a cash infusion to the company, the move is a clear indication to analysts and investors that the money of the company is disappearing and is disappearing fast.

BlackBerry shares fell by another 16% to USD6.50 in New York, making its total decline at 45% of previous valuation. The stock had rebounded by 3.2% to USD6.70 at mid morning trading earlier.

In the last quarter, cash reserves of the smartphone manufacturer contracted by nearly USD500 million. At this rate, the company would use up its USD2.6 billion cash and investments by the end of 2014. The company also has USD2.9 billion of outstanding purchase commitments for the next twelve months, according to recent regulatory filings by te company. With funds slowly dissipating, there is great pressure for a comeback attempt, according to many investment analysts such as John Stephenson of First Asset Investment Management Inc.

According to Stephenson, who nanages nearly CAD2.8 billion or USD2.69 billion, part of which is BlackBerry stock held in stock exchange traded funds, "It's going to be very difficlt to turn this around. They've lost so much ground."

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