BlackBerry shares rally as short-sellers bail out

Tue Jan 21, 2014 12:34pm EST
 
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TORONTO Jan 21 (Reuters) - BlackBerry Ltd, one of the biggest losers on the Toronto Stock Exchange last year, is one of the top performers of 2014 as optimism grows and short-sellers hurriedly bail out.

The company's Nasdaq-listed shares rose 7.9 percent in trading on Tuesday, a day after a big run-up in the stock on the Toronto Stock Exchange.

Analysts believe the 30 percent surge in BlackBerry's share price this year has much to do with some fast moves on the part of new Chief Executive John Chen that have boosted shareholder sentiment and forced short-sellers to exit their positions.

"I think the majority of people trading the stock on a daily basis are probably not there on a fundamentals view, they are more likely looking at what the news flow is going to be on a one to two-month basis. And I'd agree that the news is probably going to be more positive than negative in the near term," said Atlantic Equities analyst James Cordwell.

Much of the optimism springs from the company finalizing a handset production deal with FIH Mobile in December. The deal lowers the risk of the company having to book massive writedowns on unsold smartphones.

Other developments have also helped. The Pentagon indicated last week that BlackBerry phones account for roughly 98 percent of devices being supported as part of a program aimed at bringing greater mobile access to Department of Defense staff.

"Any rise in BlackBerry is based on optimism for the future, so given BlackBerry's renewed focus on secure government and enterprise sales, this Pentagon news is certainly positive," said Morningstar analyst Brian Colello.

"The larger question is how many more of these deals are in the pipeline and is it enough to make the business sustainable? That still remains the big question."

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