Just about everyone expects BlackBerry’s next earnings report to be a complete horror show, as the company’s fruitless effort to take itself private scared away potential customers and drove its share price to lows not seen in more than a decade. StreetInsider points us to a new research note from Bernstein analyst Pierre Ferragu, who projects that BlackBerry burned through $800 million of its cash pile over the last quarter alone. Or put another way, Ferragu projects that it took BlackBerry only three months to burn through 80% of the $1 billion cash injection it received from Fairfax Financial.
That said, there’s a silver lining here for BlackBerry: Ferragu thinks that things should get better for the company because, as Lennon and McCartney once sang, “they can’t get no worse.”
“Our detailed analysis shows that the company has assets worth $6 billion to $13 billion,” writes Ferragu. “In this context, current price reflects a conservative SOTP valuation, with limited room for further decline in the stock price also including liquidation costs.”
If BlackBerry’s assets are at worst worth $6 billion then its current market cap of around $3.2 billion looks much too low, which explains why Ferragu doesn’t think the company’s share prices can possibly fall much further. All the same, he slaps the company’s shares with a price target of just $5.50, which is still around $0.75 lower than their current price. Ferragu also says it’s way to early to make any speculative bets on the company’s prospects for a turnaround since we still don’t really know what its plans are going forward.