BlackBerry's Jam Starts

 | May 13, 2013 | 10:44 AM EDT  | Comments
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BlackBerry (BBRY) is up again this morning.

There are positive comments from Barron's this past weekend about the company's mobile device management (MDM) product as part of its new BB10 operating system.

Most of the focus of the casual BlackBerry observers in the past six months has been on whether or not the new lineup of phones will sell well. That's a critically important variable. But the company has another tool in its arsenal to wage that war in MDM.

The idea is that BlackBerry has always been incredibly strong in corporate enterprise. CIOs loved its security. Of course, the world has changed from 2005 when BlackBerry was the dominant smartphone. Today, with the advent of Bring Your Own Device and the proliferation of Apple (AAPL) iPhones and Google (GOOG) Android devices, BlackBerry phones have lost their luster, even with their new line of phones.

Yet BlackBerry is still pressing CIOs to use the BlackBerry Enterprise Server 10 (BES 10) as their back-end security system to help ensure all the corporate data remains secure.

Here's the money quote from Barron's:

"If even a fraction of enterprises take up BES and the NOC, bulls think it could boost the stock. Peter Misek, who follows BlackBerry for Jefferies & Co., and rates its shares Buy, doesn't expect BlackBerry will win the smartphone wars. But with perhaps 500 million corporate users of email on mobile devices, worldwide, Misek reasons that if just 10% of them were to take up BlackBerry's offer to use the NOC, and if each one paid $100 per year, the result would be a steady $5 billion in revenue for BlackBerry annually.

Put a 42% operating margin on that, and you could be looking at $2.50 per share in earnings, for a stock worth $30 at a P/E multiple of 12. With a steady $5 billion in security revenue, BlackBerry could be attractive to an acquirer, he thinks. For example, Misek speculates that Microsoft might want to boost its standing in mobile by buying the company."

Another great point from Dan Nathan over at Risk Reversal (who has formerly been more bearish on the stock, at least at current levels) is that 37% of the float is now short. That is Crazy Eddie INSANE, especially with the types of economics Misek points out above.

As he rightly points out, a high short float has been the death knell of shorts in Tesla (TSLA), Green Mountain (GMCR) and First Solar (FSLR) this year. There's no reason to think it can't happen to BlackBerry shorts as well.

Today is the opening of BlackBerry's Jam developer conference in Orlando. Expect some news.

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