Blackberry Ltd (BBRY) Not Getting Pentagon Contract; Stock Nosedives

Blackberryuser1462590383 / Pixabay

Canadian smartphone and software firm BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is taking a nosedive on news that the U.S. Department of Defense is not planning on purchasing an additional 80,000 BlackBerry smartphones as reported earlier this week.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) stock was up around two dollars on Monday after news broke that the DoD was reportedly purchasing 80,000 additional handsets for military use, but is down almost an equal amount after losing nearly a dollar yesterday and another 60 cents as of noon ET in today’s trading.

New BlackBerry CEO John Chen, and his plans to turn around the company, have been relatively well received by the markets to date. That said, it’s going to take some big wins like this week’s phantom DoD contract to get BlackBerry back on its feet.

Official statement from the Department of Defense

Late Thursday, however, a media rep for the DoD contacted media outlet The Verge with an official statement denying the story. “Absolutely no new orders have been placed for new BB devices. The DISA press release put out Jan. 16 never alluded to any devices being purchased. The 80,000 BBs and 1,800 non-BB devices referenced in the release are legacy systems already in DoD inventories.”

The text of the misinterpreted DoD press release can be found below.

“The program currently supports 1,800 unclassified mobile devices including iPad 3 and 4, iPhone 4S and 5, Samsung 10.1 tablets and Samsung 3S, and Motorola RAZR devices with participation from the combatant commands, services, and agencies throughout DOD. The program also supports 80,000 BlackBerry phones.”

BlackBerry turnaround efforts

New BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO John Chen has made it clear the company is not going to let the cutthroat smartphone market dictate its future. Chen has already publicly stated that he is committed to refocusing BlackBerry on the enterprise sector as well as getting back to basics with software and services.

Chen was also quite upfront in saying the recent deal he cut with Foxconn to develop a low-end smartphone was largely about shifting the inventory risk of the new device over to Foxconn.

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