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BlackBerry Surges After Upgrade

By Sam Mattera – Feb 18, 2014 at 11:20AM

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BlackBerry and Nokia shares are moving higher, while Dow Jones component Microsoft is going nowhere.

The Dow Jones Industrial Average (^DJI 0.10%)came back from a modest drop to reach breakeven as of 11:30 a.m. EST. Dow component Microsoft (MSFT 0.13%) was slightly underperforming the broader market, while shares of Nokia (NOK 1.00%) and BlackBerry (BB 2.36%) headed higher.

Homebuilder confidence collapses
The National Association of Home Builders housing market index, a gauge of homebuilder confidence, came in with a reading of 46 for February, sharply lower than the 56 that economists expected.

This data should be seen as a negative for the U.S. economy, and by extension the stock market. However, the reading isn't considered the most vital of economic indicators. Still, it suggests that the U.S. housing market may be weakening.

Nokia finalizes sale to Microsoft
Last Friday, Nokia said the deal to sell its handset business to Microsoft would be finalized by the end of March. While the deal was widely expected to go through, Nokia shareholders seem to be reacting positively.

For its part, Microsoft shares were down just 0.21% on the morning session. Over the weekend, a report from ZDNet indicated that Microsoft was considering releasing a version of Office for the iPad sometime in the near future. Analysts have long called for Microsoft to make such a move, which could result in billions of additional Office revenue.

BlackBerry gets an upgrade
BlackBerry was one of the biggest gainers on Tuesday, rising more than 5% early in the session. Fueling the rally was an upgrade from an analyst at FBR Capital, who raised the rating on BlackBerry from underperform to market perform, largely based on positive momentum.

Investors may also have been reacting positively to Third Point's (the hedge fund run by Dan Loeb) investment in the struggling handset maker. On Friday, Third Point's 13F filing showed that as of Dec. 31, it held more than 10 million shares of BlackBerry.

Given that it's now mid-February, it's possible that Loeb could have already dumped his stake. But the investment suggests that the legendary investor sees something he likes in the Canadian company. Given the volatility in BlackBerry shares, and questions over the company's long-term viability, it's not surprising that a big investment from Loeb would send shares moving to the upside.

Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$34,429.88 (0.10%) $34.87
Microsoft Stock Quote
$255.02 (0.13%) $0.33
Nokia Oyj Stock Quote
Nokia Oyj
$5.05 (1.00%) $0.05
BlackBerry Stock Quote
$5.20 (2.36%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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