BlackBerry Ltd. will issue its full second quarter financial results Friday morning as scheduled, but CEO Thorsten Heins won’t face questioning from financial analysts as he usually does.
The company said today that the usual conference call with analysts has been cancelled. Instead comments on the results will be released in a management discussion document to be released next week.
BlackBerry’s stock price has dropped to just over US$8 a share, which is below the suggested US$9 a share that a consortium says it will pay to take the company private if a look at BlackBerry’s books passes scrutiny.
The drop in share price suggests that investors don’t believe the US$4.7 billion offer from the group, led by Toronto’s Fairfax Financial Holdings, will materialize. Fairfax says it is still trying to arrange financing.
Meanwhile, Canadian Press reports that on Wednesday Jabil Circuit Inc., the Florida-based company that makes BlackBerry handsets, is discussing with the company how it might ends its relationship. That leaves the possibility that BlackBerry will get out of the handset business, or rely for the time being on stock in its warehouse.
A column in this morning’s Globe and Mail suggests how tough it will be for BlackBerry it raise money. Boyd Erman argues that at least some of the money – perhaps as much as $1.5 billion – will have to come from bonds or syndicated loans. The question is what interest rate would BlackBerry have to charge to attract interest?
Erman notes a cell phone manufacturer recently was in a similar position: Nokia Corp. For a time its $1 billion bond due in 2019 reached a yield of 11 per cent. Last year it was more than 8 per cent (bond rates fluctuate). As the company’s situation improved, the bond yield is now around 5 per cent.
His point is that high bond rates would mean that BlackBerry [Nasdaq: BB] could face paying over $100 million a year in interest costs – at a time when it is struggling with poor sales of a new product line, paying severance to 4,500 people being laid off and shifting its strategy.