The company has settled its dispute with Facebook, which is apparently still good news.
It has been a full week since BlackBerry (NYSE:BB) announced that it had settled its patent dispute with Facebook (NASDAQ:FB). To date, no further news has surfaced on the details of the agreement, which involves technology used in instant messaging. Both parties have been shrouded in silence, with BlackBerry telling Bloomberg only: “We have resolved our disputes under a confidential agreement and have no further comment.”
That seems to be fine with investors. Since the settlement was announced, BlackBerry shares have only gone up. After rising another 8% by 2:30 p.m., the stock is up over 87% in a week so far.
What does this mean?
Positive comments in the media seem to be keeping the rally going. Earlier this week, Investor’s Business Daily noted that BlackBerry shares “have jumped well beyond an entry point.” And the newspaper wondered if an automotive pact with Amazon could offer even more upside. The newspaper pointed out that BlackBerry signed a multi-year exclusive deal with Amazon’s (NASDAQ:AMZN) Amazon Web Services (AWS) in December to develop a software platform that will allow carmakers to read sensor data from vehicles to improve the performance of cloud-connected vehicles.
Investor’s Business Daily concedes, however, that it’s hard to gauge the revenue potential of the BlackBerry/AWS alliance “until there’s better visibility of specific ideas.” Regardless, the double dose of good news seems to have investors excited about BlackBerry.
A note of caution: it is not a healthy company and is not negotiating with Amazon from a position of strength. According to data from S&P Global Market Intelligence, BlackBerry has lost money for seven straight quarters and is expected to continue to do so.
Simply put, BlackBerry needs this Amazon deal much more than Amazon does. It probably needed the Facebook deal even more. Given the situation it is in, the success of this stock is far from certain.