BlackBerry Is Finally Realizing Smartphones Aren't the Answer

 

NEW YORK (TheStreet) -- Besides announcing a new Classic smartphone, BlackBerry (BBRY)  says it's focused on selling secure communications as the company embarks on a revamped business strategy that may represent its best route for survival.

The company now has deals with Boeing (BA) and Samsung (SSNLF) to integrate its BlackBerry Enterprise Service into a number of new products. BES 12 is designed to allow corporations and government agencies to manage and secure BlackBerry devices on internal networks as well as smartphones and tablets that run on Google's (GOOGL)  Android and Apple's (AAPL) iOS platforms.

BlackBerry shares are up nearly 4% to $10.37 on Monday, up over 39% for the year to date.

According to CEO John Chen, BlackBerry is working with aerospace and defense contractor Boeing to help develop a super-secure Android smartphone that can self-destruct if there is tampering.

The handset, called Boeing Black, was formally announced two years ago but actual plans for the device weren't filed with the FCC until earlier this year. The smartphone has been redesigned to encrypt voice calls and is aimed at government agencies and other entities that require secure voice and data communications.

The phone itself is sealed closed. Any attempts at opening or tampering with the hardware will trigger the device to erase all information contained inside. Boeing plans a number of snap-on expansion back panels to add features such as dual-SIM cards for accessing multiple network access, satellite modems, fingerprint recognition controls and extended-range power packs.

According to Chen, "Boeing is collaborating with BlackBerry to provide a secure mobile solution for Android devices utilizing our BES 12 platform. That, by the way, is all they allow me to say." 

During the company's latest earning call Chen said the company cut its losses from $4.4 billion in 2013 to $148 million in the last quarter but handset sales had dropped from 4.3 million to 1.9 million units during the same time frame. Revenue were nearly evenly split between device sales (46%) and software/services including the BlackBerry Enterprise Server platform which registered a 100% gain in the last quarter.

"BlackBerry is effectively transitioning to a cross-platform software/services company," according to analysts at TD Securities. "In this context, the device business should not be banked on to generate profit," the analysts added and upgraded the company to "buy" from "hold" with a price target of $13. Raymond James also raised its price target to $11 from $10.50 but JPMorgan and RBC lowered theirs to $10 and $11.

BlackBerry recently purchased Secusmart to gain access to that company's high-security voice, data and eavesdropping technologies. And, BlackBerry has also announced it is working with Samsung on that company's secure Android solution called Knox. Samsung Knox was approved by the U.S. National Security Agency in October for a number of that's company's Android devices including the Galaxy S4, S5, Galaxy Note 3 and 10.1. The Boeing Black phone also made it onto the National Security Agency's approved list.

-- Written by Gary Krakow in New York.

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Gary Krakow is TheStreet.com's Senior Technology Correspondent This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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