BlackBerry has been on the ropes for years, struggling against younger, hipper phones like the Android and iPhone. In a huge bit of luck, the Department of Defense just threw the company a lifeline.
Late last week, the Pentagon announced it would purchase 800,000 BlackBerry smartphones that will be the primary device supported on a new military network as part of a mobility push. That sent the Waterloo, Ontario company’s stock soaring on the Toronto stock exchange Monday, pushing the stock price up 18 percent. Today, it’s up 9 percent on the NASDAQ.
This is great news for BlackBerry, which had a dismal 2013. It lost $4.4 billion and saw its stock price fall 33 percent
The company has been on a bit of a roll lately. A Citron Research report said last week that the company would reach a stock price of $15 per share. That forecast, combined with the Pentagon contract, has investors bullish on BlackBerry.
There is other good news as well: Last month, the company finalized a deal with FIH Mobile to create a handset, which will give BlackBerry the opportunity to move away from its reliance on phone sales.
It’s a far cry from the heady days of 2008, when the stock was trading at $148. But it shows that CEO John Chen’s plan to transform the company seems to be working.
It also shows just how much a contract with the Pentagon can make or break a company. Although unpopular with soldiers, Pentagon officials have said that BlackBerry phones have the security needed to transmit sensitive data.
The purchase is part of a larger
push to secure data in the wake of Edward Snowden’s leaks. Right now,
the Pentagon is in the middle of a $5 billion plan to safeguard
classified materials in an effort to prevent potential leakers from easily making off with data.
Posts
