BlackBerry stock driven up by reported interest from new buyer

BlackBerry stock is rising after a report in the Wall Street Journal that the U.S. private equity firm Cerberus Capital Management LP has expressed interest in the failing Waterloo, Ont.-basedsmartphone maker.

Cerberus, which is based in New York and specializes in distressed companies, is reported to have signed a confidentiality agreement that would allow it to access BlackBerry's private financial information.

BlackBerry stock closed at $8.26 in Toronto and $7.98 on the Nasdaq. The stock price spiked rapidlyafter the report was published. Earlier in the day, it had fallen by as much as four per cent on news that the cost of its restructuring efforts will be four times higher than anticipated and that it is looking to sell some of its real estate holdings.

The Toronto firmFairfaxFinancial Holdings, which made a preliminary offer for BlackBerry of $4.7 billion last month, has until this week to deliver an initial draft of a merger agreement.

The company, which is one of BlackBerry'sbiggest shareholders and is headed by formerBlackBerryboard member PremWatsa, has until Nov.4 tosecure financing and conduct due diligence on the preliminary offer, during which timeBlackBerryis free to seek other buyers.

BlackBerry's stock hadbeen driven down earlier this week amid reports the Fairfax offer overvalued BlackBerry at $9 a share.Analysts suggested the company might be worth more in the region of $7 a share.

BlackBerry real estate may be sold

It also emerged Wednesday thatBlackBerry is reportedly considering sellingsome of its real estate in Waterlooas it strugglesto restructure the failing company, shrinkingits workforce and looking for waysto extract value from itsoperations.

The Globe and Mail reported thatBlackBerryhas asked real estate firms to suggest ways of tapping the value of about 20properties the company owns in the Waterloo area.

The newspaper'ssources said BlackBerryhas asked for ideas that wouldgenerate the largest possible return from its real estate in as little time as possible, through a confidential process begun last week.

In an emailed statement to CBC News, BlackBerry said it evaluates its real estate on an ongoing basis to "ensure the company is optimizing resources."

"As we work to our target of reducing expenditures by approximately 50 per cent over the next three quarters, that includes optimizing our space," the statement said. "Should space become unnecessary for BlackBerry's continued use, we will work with key partners in the community who may need some of our surplus space."

Restructuring to cost $400M

BlackBerryis in the process of restructuring and announced last month that it wouldeliminate4,500 jobs, about 40 per cent ofits global workforce. It is not clear how many of those jobs are in Waterloo region. BlackBerry has said only thatthe layoffs will affect "allfacets of the company."

According to financialdocuments filed with regulators, BlackBerry expects to have $400 million US in charges on the books before the end of May 2014 related to the cost oflayoffs, the reworking of itssmartphonelineup and other changes to its manufacturing, sales and marketing operations.

That's four times more than what it reported earlier this year,when it said it would likely book $100 million in charges through its 2014 fiscalyearas it cut back staff and reduced other costs. Since then, the company's financial results have weakened, mostly on poor sales ofitsBlackBerryZ10touchscreen phones.

The company announced on Sept. 23it had signed a conditionalletter of intentoutlining a deal that would see it boughtby a consortium led byFairfax.

Soon after, it reported asecond-quarter loss of $965 millionandrevenues of $1.6 billion,a declineof 45 per cent from the same period last year.

BlackBerry said it had 3.7 million smartphone sales on the books in the second quarter, a drop of 74 per cent from the 14.5 millionit sold in its best quarter ever, almost three years ago. But it said if all phones that were shipped in the second quarter but could not be officially counted as sales until they are sold through to customers are counted, sales totalled 5.9 million.

Some assets alreadyon auction block

The documents filed with regulators give a clearer indication of BlackBerry's financial situation and what it's doing to try to stem the losses.

In the documents. BlackBerry disclosed that it has marked certain unnamed assets as "redundant" and some have already hit the auction block, including properties, as well as plants and equipment, though the company did not identify anything specific.

For the second quarter,BlackBerrysaid it booked a loss of $7 million related to the declining value of those assets.

WhileBlackBerrystopped providing specific data for its subscriber base earlier this year, saying that it no longer accurately reflects its business model, the company said "customers" continued to decline in the second quarter in every region except the Asian-Pacific market.

In its outlook, the company said monthly service revenues are expected to decline further in the third quarter, though not at the escalated rate experienced in the second quarter. The company said service revenue dropped about 27 per cent to $724 million in the three months ended Aug. 31.

It expects service revenues to fall another 12 per cent in the third quarter.