NEW YORK — Shares of BlackBerry edged lower before Thursday’s opening bell with hurdles beginning to materialize before a potential deal to put the troubled smartphone maker up for sale.
Bernstein Research cut its rating on the company to “Underperform,” reversing an upgrade Monday, saying that BlackBerry’s cash position is far worse than previously thought. Analysts with the firm project that the company will burn through close to $2 billion over the next two quarters on a stand-alone basis.
As a result, Fairfax has “almost no chance” to secure the financing and support it needs for its bid, the investment firm said.
Fairfax said two weeks ago that it would buy BlackBerry for close to $5 billion, but the financing has always been in question.
However, on Wednesday it was revealed that a private equity firm might be interested in buying BlackBerry as well.
Cerberus is looking to sign a confidentiality agreement with BlackBerry that would allow it to access the company’s private information, an official familiar with the situation said Wednesday on condition of anonymity. The official is not authorized to discuss the private talks.
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Fairfax, BlackBerry’s largest shareholder, is still trying to attract other investors. It’s unclear whether Cerberus is seeking to join with Fairfax or if it is moving in separately.
Under the agreement with Fairfax, BlackBerry is allowed to speak with other potential buyers.
Citi analyst Jim Suva was more optimistic about the company’s prospects and upgraded BlackBerry stock to “Neutral” from “Sell. He said the company’s shares have tumbled, as expected, over the past few years and pointed to the preliminary buyout with Fairfax.
In premarket trading, shares of BlackBerry Ltd. fell 12 cents to $7.84.