BlackBerry Ltd. (BBRY) shares advanced after the struggling smartphone maker announced a management-services partnership with rival Samsung Electronics Co., the first time the companies have teamed up for a major product.
The stock increased 7 percent to $12.06 at the close in New York, the highest price since June 2013. Samsung’s Knox system, which offers a suite of secure work applications, will run on BlackBerry’s new server, known as BES12, the companies said in a statement today.BlackBerry held an event today in San Francisco to unveil the server, which helps businesses manage devices and communicate securely. The partnership competes with an alliance between International Business Machines Corp. and Apple Inc., whose announcement in July sent BlackBerry’s shares down 12 percent in one day. BlackBerry is now teaming up with one of its biggest rivals in the growing mobile device management market.
“People probably didn’t expect to see these two companies on the same stage, at least not willingly,” John Sims, head of BlackBerry’s enterprise services business, said at the event. “We need to be able to provide a breadth of choices and do that with companies of the highest level.”
Since taking over the Waterloo, Ontario-based company a year ago, Chief Executive Officer John Chen has focused BlackBerry on business users and outsourced some device manufacturing. Partnerships seem to be the next step in his plan to return the company to profitability by 2016.
Today’s announcements show Chen has narrowed his focus on the enterprise market, said Anil Doradla, an analyst with William Blair & Co.
“We know where we are today, we know where he wants to get to. ‘How do we get there?’ is the key question,” Doradla said at today’s event. “They’re totally not out of the woods yet but they are moving in the right direction.”
Earlier this week Chen said he had met with the heads of Chinese smartphone makers Xiaomi Corp. and Lenovo Group Ltd. and was interested in partnerships to expand in China.
Investors have supported Chen’s turnaround plan, pushing the stock up 62 percent this year and putting it on track to beat the Nasdaq Composite Index for the first time since 2009. Ontario Teachers’ Pension Plan increased its holding in the company to 1.6 percent as of Sept. 30, according to a Nov. 7 regulatory filing.
Apple and IBM aren’t BlackBerry’s only competition. Good Technology Corp. and VMware Inc.’s AirWatch, which provide security for companies that let employees use personal devices, have gone after longtime BlackBerry customers.
With the flexibility the Samsung partnership brings, it’ll be harder for BlackBerry’s competitors to take its customers, Chen said.
“I’m ending their party,” he said.
By Bloomberg
To contact the reporter on this story: Gerrit De Vynck in Toronto at gdevynck@bloomberg.net
To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net James Callan, Stephen West
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