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Is BlackBerry back? Why the company’s stock just hit a 4-year high

Under the leadership of CEO John Chen, pictured above, BlackBerry is finally starting to turn heads again among investors and analysts.
Under the leadership of CEO John Chen, pictured above, BlackBerry is finally starting to turn heads again among investors and analysts. Manu Fernandez/CP

Yes, you might start to hear about BlackBerry again — and no, the reason has nothing to do with smartphones.

READ MORE: BlackBerry’s share of the global smartphone market reaches 0%, report finds

After flatlining through 2016, the company’s stock has been on a tear since late March, rising by more than 60 per cent over the past two months or so. And some analysts believe the momentum will last.

The company’s stock price could reach $45 by 2020, long-time BlackBerry watcher Gus Papageorgiou of Macquarie Group recently predicted, three times what it is now and over four times what it was worth at the beginning of the year.

READ MORE: BlackBerry scores $815M in arbitration decision in dispute with Qualcomm

The recent rally suggests that investors are finally starting to believe in BlackBerry’s years-long turnaround as a software maker, after the company officially ditched its mobile device manufacturing business last fall.

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The company’s hot streak on the stock market started in late March, when it posted quarterly results that exceeded Bay Street’s expectations. The climb continued through April and got a further bump in May, as the WannaCry malware that crippled government and company computers around the world brought renewed attention to cybersecurity, a key revenue source for BlackBerry.

READ MORE: BlackBerry CEO John Chen celebrates quarterly results despite revenue loss

The company was quick to capitalize on the global cyber panic, noting in a post on its blog that its “unparalleled cybersecurity expertise” can help businesses prevent and recover from ransomware attacks.

But perhaps most importantly, last week Ford announced that its in-car interactive touch-screen system, which runs on BlackBerry software, gained the ability to upgrade via Wi-Fi, sparing users the hassle of visiting a dealership or having to use a USB key.

According to Papageorgiou, BlackBerry’s focus on cybersecurity and the auto industry makes for a winning combo.

READ MORE: BlackBerry partners with Ford to provide software for connected cars

“Controls within the car will evolve from mechanical knobs and buttons to touch screen icons that will control entertainment systems, climate, navigation and communication,” the analyst wrote in a recent research note. And BlackBerry is well positioned to capture that market.

The company already dominates the software market for in-car entertainment, with an estimated 50 per cent market share, and could easily expand beyond that, according to Papageorgiou.

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Specifically, the ability to update in-car software via Wi-Fi could give it a crucial edge.

READ MORE: BlackBerry to spend $100M on self-driving technology

“Eighty-five per cent of recalls in the industry involve a software issue. If these issues could be resolved over the air, it could drastically reduce warranty expense,” noted Papageorgiou.

And software that can operate remotely could also be key for BlackBerry’s cybersecurity offering to the industry. The company is developing an anti-virus service that can scan remotely for malware in vehicles’ software and update security patches when the car is idle. The service can even alert the driver directly if it detects hacking that could pose serious safety threats, Papageorgiou reported.

READ MORE: BIV: BlackBerry rolls out new security platform

“No car company wants to be on the front page of the newspapers because its product was hacked and a driver and passengers incurred life-threatening injuries as a result,” wrote Papageorgiou. He added that regulators will likely soon mandate that automakers take action against this security hazard.

And BlackBerry is also growing increasingly popular among trucking companies, thanks to a device that allows them to closely monitor their fleet as well as gather data such as temperature, humidity and pressure inside trailers and whether or not they have have been unloaded. Early adopters are raving about the technology’s cost-saving potential, according to Papageorgiou.

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The days of BlackBerry the device may be gone for good for Canada. But for BlackBerry the company it’s a brand new day.

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