Wed, Jan 22, 2014 - Page 15 News List

BlackBerry shares surge on Pentagon network dominance


BlackBerry Ltd shares surged the most in a month after the US Department of Defense said the company’s smartphones would account for 98 percent of devices on one of its new networks.

About 80,000 BlackBerrys and 1,800 smartphones and tablets based on Apple Inc’s iOS software and Google Inc’s Android operating system will start being hooked up to the US Department of Defense’s management system at the end of this month, the Defense Information Systems Agency (DISA) said in a statement last week.

BlackBerry shares rose 8.2 percent to C$10.80 at 4pm in Toronto on Monday, their biggest gain since Dec. 20. After tumbling 33 percent last year, the stock has gained 37 percent this year.

The Waterloo, Ontario-based company has been losing market share to Apple and Android devices for years, as its devices failed to carry the same features and range of consumer-focused applications as the iPhone or Samsung Galaxy range.

John Chen, who took over as chief executive in November last year, is reorienting the company toward its core of business and government users, pledging to predominantly make models fitted with BlackBerry’s traditional physical keyboard in the future.

The report shows that Samsung Electronics Co, the biggest maker of Android devices, and Apple are not making the inroads into military smartphone procurement that many expected because they cannot always meet the security specifications the Pentagon wants, Doug Pollitt, a broker at Toronto-based Pollitt & Co, said by telephone.

“It’s a challenging specification and other vendors are having a tough time meeting it,” said Pollitt, whose brokerage owns shares of BlackBerry. “BlackBerry has already got it.”

DISA, which implements the US military’s information technology policies, plans to introduce the first phase of a new system on Jan. 31 to make it easier for personnel to work on unclassified documents from wireless devices. A military app store is to be included in the first phase and the program currently supports 16 mobile apps, according to a DISA statement.

Monday’s gain follows a 6.6 percent advance on Friday last week after Citron Research published a report calling for the stock to climb to US$15 on the NASDAQ. Trading was closed in New York on Monday for Martin Luther King Day.

“BlackBerry has a healthy balance sheet, with ample liquidity to execute its turnaround strategy and make the necessary investments for growth,” according to the report.

Citron added that while it more typically makes short-selling bets against a stock rather than taking a long position, this was not a time to bet against BlackBerry.

“It is suicidal to bet against well-capitalized strong management in the enterprise mobile space,” Citron said.

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