BlackBerry Ltd to Deal with Foxconn - American 1st Securities

American 1st Securities follows a possible turning of the page for troubled Canadian handset market BlackBerry Ltd as it agree to allow the FoxConn Group to take over its manufacturing business component.

New York (I-Newswire) December 30, 2013 - Canadian mobile handset manufacturer BlackBerry Ltd had looked certain to end this year in the worst possible of circumstances. The trouble plagued company had seen its market share for smart phones all but completely obliterated by larger rivals Apple and Samsung in recent years and its perceived inability to competed saw share values drop 47% this year alone. This decline exasperated further by its failure to introduce competitive new models for its product line and the falling through of $4.7 billion buyout bid had left many investors completely disinhearted for the company's future.

Confidence however was regained with the announcement that the Foxconn group, famous for manufacturing consumer electronics from Apples' iphone range to Sony's Play Station consoles is to begin to take over all of the Canadians manufacturing in its plants in Indonesia and Mexico. Although Blackberry will not be at this stage at least licensing its technology to the Taiwanese company, the markets have been assured that the chokehold of manufacturing has been removed from around BlackBerry's neck.

"You can see just how desperate investors in BlackBerry were for the company to divest themselves from manufacturing with the 16% surge in value on the day of the announcement of the Foxconn deal. While this still doesn't mean a total closure of the manufacturing side of the company, it does show a strong willingness to begin focusing on infrastructure support, a direction many see as the only smart move for the company" explained Tony Webb, a Technology Analyst at American 1st Securities.

The deal which will initially allow Foxconn to manufacture only the lower end of BlackBerry's line is expected to expand to include both designing the lower tier products and eventually producing the company's flagship business devices. This would allow engineers at BlackBerry to concentrate efforts in software design to run on devices other than their own as recently seen with a messaging app that is being run on over 40 million Apple and Android devices.

"Is this the end of BlackBerry's problems, no, but it is a very strong indication that they have both the means and the understanding to overcome them. With their share value so low, any improvement toward profitability will translate into gains for investors that are willing to take the chance on them again" ended Tony Webb of American 1st Securities.

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Business > Investment

Published On:

December 30, 2013

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