Research In Motion Ltd.'s plan to reinvent the BlackBerry is marching ahead and, suddenly, so is its stock price.
The company's battered shares jumped more than 10 per cent Thursday on the news this week that its upcoming BlackBerry 10 phones have entered lab testing with 50 wireless carriers around the world. The stock ended the day at $8.68 in Toronto, up 80 cents – its highest closing level in more than four months.
These phones, which are due out in early 2013 after numerous delays, are crucial to RIM's turnaround strategy – designed to be the high-end phone that finally stops BlackBerry users from switching to Apple Inc.'s iPhone and smartphones running Google Inc.'s Android software.
Lab testing is done to assure wireless carriers such as BCE Inc.'s Bell Mobility that devices are fully compatible with their wireless networks and will work for customers out of the box. It was not surprising that RIM's devices would enter carrier testing around this time, given the pre-announced launch date.
But previous delays of the devices, which were often announced within grim financial results, had shaken investors' faith in the company's ability to deliver a competitive product. Now that RIM's new phones have entered lab testing, the market seems to think that it is unlikely it can drop another bombshell delay that puts its future in doubt.
"I think many are coming to the realization that not every carrier has abandoned them yet," says Richard Tse, a technology analyst with Cormark Securities Inc. "While we're not saying it's going to work for sure, they have a shot – something I couldn't have said six months ago."
Up until recently, RIM endured an endless barrage of terrible news: Large corporations and government departments, particularly in the United States, continue to switch to iPhone and Android; market share collapsed in important developed markets; and quarterly results have gotten progressively worse.
RIM shares are down about 95 per cent from their peak in 2008.
Although few analysts expect some sort of dramatic reclaiming of market share when BlackBerry 10 launches, some on Bay Street have begun to look a bit more positively on the stock. Other analysts upgraded the stock after RIM's recent earnings report, when it became more clear that RIM's new CEO Thorsten Heins was delivering on promises, had the company on a steady path and that RIM – despite its challenges – could be undervalued.
Kris Thompson, an analyst at National Bank Financial who has been bearish on RIM in the past, said the lab testing announcement "is one of the near-term positive catalysts that we've been expecting to support our short-term trade idea to buy this stock ahead of commercial availability" of the devices. Cormark's Mr. Tse, meanwhile, says RIM has a "viable shot" at launching the devices next year while being able to hold onto its cash balance.
Mr. Heins, in a statement on Wednesday, said testing will be going on at more than just those first 50 wireless companies, as RIM prepares for a global rollout that will see BlackBerry 10 launch in both developed and emerging markets.
"This process will continue in the coming months as more carriers around the world formally evaluate the devices and our brand new software," Mr. Heins said. "Our (application) developer teams are continuing to generate momentum to bring a wealth of applications to BlackBerry 10, our enterprise teams have started to present BlackBerry 10 devices and services to our business customers, and our engineers are fully mobilized to ensure that BlackBerry 10 launches flawlessly in the first quarter of 2013."