BlackBerry shares surge on huge order for new devices
BlackBerry shares surged on Wednesday after the smartphone maker said one of its established partners has placed an order for 1 million BlackBerry 10 smartphones, with shipments starting immediately.business Updated: Mar 14, 2013 12:47 IST
BlackBerry's volatile shares surged on Wednesday after the smartphone maker said one of its established partners had placed an order for 1 million BlackBerry 10 smartphones, with shipments set to begin immediately.
The Waterloo, Ontario-based company said it is the largest ever single purchase order in its history, a big fillip for the company that is attempting to regain relevance in the ultra-competitive smartphone market, where it has ceded ground to rivals like Apple Inc's (AAPL.O) iPhone, Samsung Electronics' line of Galaxy devices and other devices powered by Google Inc's (GOOG.O) Android operating system.
In a make-or-break move to regain market share and return to profit, BlackBerry introduced a new line of smartphones powered by its BlackBerry 10 operating system, to much fanfare earlier this year. The touchscreen version dubbed the Z10 is already on sale in over 20 countries, while a device named the Q10 with a physical keyboard is set to be launched in April.
The company, which has abandoned its old name, Research In Motion, and renamed itself BlackBerry, did not disclose either the location of the "established partner" or the time frame for the device sales. BlackBerry also did not disclose whether the order is for just Z10 devices or both Z10 and Q10 devices.
Despite the lack of detail, analysts view the announcement as a positive, especially since it comes close on the heels of announcements from Verizon Communications Inc (VZ.N) and AT&T Inc (T.N) - the two largest U.S. wireless carriers - that they plan to begin selling the Z10 device later this month.
"The combination of these three announcements gives us more comfort in our May quarter (forecast)," said Wells Fargo analyst Maynard Um in a note to clients.
Um, who has an outperform rating on the stock, expects sales of 2.5 million BlackBerry 10 devices in the quarter ending June 1.
BlackBerry's stock ended the day up 8.2 percent at $15.65 on the Nasdaq on Wednesday, while its Toronto-listed shares rose by a similar margin to C$16.04.
After the closing bell, the stock rose further, at 19:00 ET it was trading at $16.07 in the United States.
BGC analyst Colin Gillis however warned that it is too early to read too much into the single sales order.
"It's good for them...But the reality is the sales are going to be spread out over time," he said. "This is a nice headline, but it doesn't answer the questions that are still surrounding the company."
Last week, BlackBerry Chief Executive Thorsten Heins, said the company was very encouraged by the traction that the Z10 was gaining. Heins said sales of the high-end device had surpassed BlackBerry's expectations in emerging markets like India, where cheaper entry-level phones are typically popular.
BlackBerry is set to report fiscal fourth-quarter results on March 28, for the period ended March 2.
First Published: Mar 14, 2013 12:10 IST