Can RIM’s Rally Overcome This Loss to Apple?
Research In Motion (NASDAQ:RIMM) stock is up more than 8 percent this afternoon after the company announced on Wednesday that it had begun testing its new BlackBerry 10 devices set for release early next year. Shares were up more than 9 percent at $8.65, but despite the rally, the stock has plunged 46 percent so far this year and 61 percent over the past 12 months.
While the latest version of the BlackBerry is much anticipated for the company and its watchers, the phone received another vote of disapproval after the U.S. Department of Defense made a decision to move away from the device for use by its employees. According to Reuters, the Pentagon last week invited companies to submit software proposals to “monitor, manage, and enforce security requirements for devices made by Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG).”
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While the department said it would continue to support “large numbers” of the BlackBerry smartphones, the plans to make the switch were on schedule for April.
The request for proposals was posted by the Defense Information Systems Agency on a federal website on October 22. The same day, the U.S. Immigration and Customs Enforcement Agency also announced it would end its contract with RIM in favor of the iPhone. While the first request for proposals asks for at least 162,500 devices, it could rise to 262,500 by the end of the contract and eventually reach a total of 8 million devices.
The BlackBerry was the sole device of choice for the Pentagon for years because of its high level of security. A spokesman told Reuters that while the military would ensure the strict security demands are met by any new device, others had managed to create “new and innovative applications” to support the department’s changing requirements.
The loss of the Pentagon’s business is another blow for RIM, which is struggling to take on the growing clout of Apple and Samsung. The launch of BlackBerry 10 has postponed twice, but the company promised at its last earnings report that testing would begin in October.
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