BlackBerry soars after it is chosen for new DoD program

Company stock rises 10% on Tuesday, hitting highest price since September

Financial trends and news by Steven Loeb
January 21, 2014
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Will anyone be surprised if, and when, interim BlackBerry CEO John Chen is officially given the title? Under his leadership the last three months and change, the company has already begun digging itself out of the hole of it truly disastrous 2013.

BlackBerry stock soared over 10% in regular trading on Tuesday, following the announcement late last week that the Department of Defense had chosen the company to be the primary device for a new mobile program.

The stock hit a high of $10.19 a share during the day, the first time it went over that mark since September 20th of last year, before finally finishing the day up 9.36%, or 85 cents, to $9.93 a share.

That was its highest close since September 19th, when it ended at $10.52 a share. Given that BlackBerry ended 2013 with its stock sitting at $7.44, that means it is up around 34% so far this year.

In his plan to save his company, Chen specifically cited its base of enterprise customers, which included the U.S. Department of Defense and all seven of the G7 governments, as a reason to be optimistic. These customer, he said, put it in a solid position going forward.

It looks like Chen was definitely on to something.

The new Department of Defense program will begin supporting 80,000 BlackBerry phones starting on January 31st, and it will continue build out capacity in order to support up to 100,000 users by the end of the fiscal year.

In addition, 1,800 other devices, from Apple, Samsung and Motorola, will also be included. 

The aim of the project is to give DoD users access to secure mobile networks that will not compromise military data or corrupt defense networks. The DOD Mobility Implementation Plan was first announced a little less than a year ago.

Chen's plan

"Don't be fooled by the competition's rhetoric claiming to be more secure or having more experience than BlackBerry," Chen wrote in an op-ed for CNBC last month, in which he laid out his plan for the coming yea.

"With a global enterprise customer base exceeding 80,000, we have three times the number of customers compared to Good, AirWatch and MobileIron combined."

There were three other pillars to his plan:

  • Messaging: in just the last two months of 2013, more than 40 million new iOS and Android users have registered to use BBM. The company will continue investing in BBM, building out features and channels, and hopes to make it profitable within the next few years.
  • QNX embedded business: QNX, which is "the dominant machine-to-machine technology of the automotive industry, is also poised to grow. BlackBerry will showcase new capabilities and cloud services, as well as new verticals for expansion.
  • Devices business: in order to stramline its device models, BlackBerry has already begun to to turn its attention away from North America and toward international markets. The company is already targeting Indonesia, via a deal with Foxconn, a manufacturer of electronic products and components.

We'll have to wait and see if he was as correct about those other aspects of the company as he was about its position in enterprise. 

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