BlackBerry Soars Again, But Is the Company Really Ready for a Comeback?

Michael Teague |

BlackBerry Soars Again, But Is the Company Really Ready for a Comeback?BlackBerry (BBRY), formerly known as Research in Motion, began trading under its new symbol and name today. More importantly, Bernstein Research upgraded the company’s stock to Outperform, resulting in a significant jump in the company’s share price, closing at $14.98 for a 15 percent gain on the day.

This is a stark contrast to Wednesday of last week when the ticker symbol change was first announced, and the company’s shares plummeted over 10 percent to close at $14.07. The name change was ostensibly part of an effort by the company to consolidate its brand image and inspire confidence ahead of the long anticipated release of its new BlackBerry 10.

Anticipation of the new phone, branded as the “BB10”, has been fraught with skepticism mostly because Apple (AAPL), Samsung (SSNLF), and Google (GOOG) have a solid grasp on the mobile phone market since BlackBerry began its decline some five years ago (a period during which it has contracted to one-tenth of its size when it was the dominant player in smartphones), and many seem to think it is simply “too late” to catch up. This was exacerbated by BBRY’s at times awkward marketing campaign for its new product, and early reports that the BB10 would not offer any particularly new or exciting features.

Now that the all the commotion has somewhat abated, however, it has become clear that BBRY is poised to take advantage of certain favorable circumstances. In terms of the product itself, while it may not offer much that is particularly new in terms of innovations, apps, and the like, it has updated the phone enough to make it viable in the context of its competitors.

BlackBerrys are still widely used by government agencies in the United States (despite several recent and high-profile defections to the iPhone 5 and other models on the part of NASA, for example), and the BB10 has a new feature that allows users to keep their work phone and personal phones completely separate in a single device. This feature may be extremely attractive to much of the corporate sector, as companies will have the ability to wipe the work side of the phone clean once an employee decides to leave or is terminated. Employees, for their part, will not have to carry two phones around with them at all times. This is also one of the only features that distinguish the BB10 from its competitors.

These aspects of the new device put the company in a good position for several reasons. BBRY enjoys an existing subscriber base of 80 million users worldwide, many of whom are extremely loyal to the brand and have waited patiently for their phone to catch up with the times. Adding to this, early market research cited by Todd Coupland of the CIBC reported that BB10 sales in Canada (where it has been in stores since last week) indicate that as much as 50 percent of pre-registrations with carriers belong to new BlackBerry customers.

This is good news given that the company does not even need a roaring comeback to be profitable in the short-to-mid term, and this seems to be supported by Bernstein’s lifting of the price target from $12 to $22. With strong pre-order numbers in the United Arab Emirates and Canada already, and some in the United States paying up to $1000 for the new phones on eBay, the situation does not seem as bleak as many have suggested.  The weekend’s 30-second Super Bowl advertisement, while perhaps not the most spectacular of this years crop, certainly garnered the company much needed exposure ahead of Monday’s events.

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Symbol Name Price Change % Volume
AAPL Apple Inc. 114.48 -1.11 -0.96 34,562,045
BBRY BlackBerry Limited 7.14 -0.12 -1.65 2,976,999
GOOG Alphabet Inc. 795.35 -3.72 -0.47 2,749,221
NM.P.H Navios Maritime Holdings Inc. Sponsored ADR Repres 6.50 -0.31 -4.55 2,800


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