Like a cat, BlackBerry appears to have nine lives. Just as investors seemed to be writing off the struggling smartphone maker, the company landed a massive US government contract and its share prices have skyrocketed.
The US Department of Defense announced last week that it was bringing tens of thousands more mobile devices to its employees over the next year. While the agency said it would give 1,800 "unclassified mobile devices including iPad 3 and 4, iPhone 4S and 5, Samsung 10.1tablets and Samsung 3S, and Motorola RAZR" to its workers, most of the smartphones will come from BlackBerry -- 80,000, to be precise.
This news caused BlackBerry's share prices to soar. The US stock market closed on Tuesday with BlackBerry shares trading at $9.93 and after hours trading up as high as $10.57 -- this is roughly a 35 percent increase from the end of 2013, when the company's shares were trading around $7.
With the advent of high-end feature-full smartphones from companies like Apple and Samsung, BlackBerry has noticeably struggled to keep up. Over the past couple of years, the company has been losing droves of customers and lots of money. Last quarter, sales of BlackBerry smartphones were off by about 50 percent and about 75 percent of those sales were for lower-end BlackBerry 7 units -- which didn't seem to bode well for the company's higher-end business that's using the newly launched BlackBerry 10 software.
Despite these woes, newly appointed BlackBerry CEO John Chen has remained optimistic and said that he plans to focus on enterprise security and messaging for 2014. When speaking to the press, Chen has often referenced BlackBerry's lucrative government contracts.
"Many in the regulated industries -- those with the most stringent security needs -- still depend solely on BlackBerry to secure their mobile infrastructure. For governments, BlackBerry cannot just be replaced -- we are the only MDM provider to obtain "Authority to Operate" on US Department of Defense (DoD) networks. This means the DoD is only allowed to use BlackBerry," Chen wrote in a memo on December 30. "Across the globe, seven out of seven of the G7 governments are also BlackBerry customers."
Last May, BlackBerry succeeded in getting its entire line of BlackBerry 10 devices to pass rigorous Department of Defense security requirements. This meant the Pentagon approved a government contract for 470,000 BlackBerry phones despite having opened up its exclusive BlackBerry contract to companies like Apple and Samsung the year before. Over the years, various government agencies have signed contracts with BlackBerry because its devices have proved to meet theneeds of high-level security thresholds.
Despite the good news for BlackBerry, the company also announced on Tuesday that it's planning to divest the majority of its Canadian real estate holdings. The phone maker said that through a combination of sale-leaseback and vacant asset sales, it will sell off more than 3 million square feet of its commercial real estate portfolio.
"BlackBerry remains committed to being headquartered in Waterloo and having a strong presence in Canada along with other global hubs," Chen said in a statement. "This initiative will further enhance BlackBerry's financial flexibility, and will provide additional resources to support our operations as our business continues to evolve."
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