Investors hitch a ride after BlackBerry seals Baidu deal

Stock hits five-year high

BlackBerry Ltd. began 2018 with a bang after it announced a self-driving software deal with a Chinese internet search giant, boosting its stock to its highest level in nearly five years.

The Waterloo, Ont. software company will work with Baidu Inc. on technology to power autonomous vehicles, the companies said in a joint release Wednesday.

BlackBerry’s QNX operating system will become the foundation for the autonomous driving platform that was launched by Baidu last spring.

In a nod to the scale of the project, Baidu called the technology Apollo after the first lunar landing.

It said it has already partnered with more than 70 top automotive manufacturers, suppliers and developers around the world.

The deal sent BlackBerry’s stock price rising by 12.85 per cent on Wednesday to $16.95 on the Toronto Stock Exchange, hitting levels that it hasn’t seen since 2013.

After three tough years and last year’s rebound, investors seem keen to jump in the passenger seat as CEO John Chen continues to morph the former smartphone maker into a software company.

Chen set his sights on the car industry as one of BlackBerry’s top revenue opportunities. Last year, BlackBerry announced deals with Delphi, Denso, Qualcomm and Visteon in the auto space where its QNX technology is a front-runner among developers racing to get selfdriving cars on the road.

Automotive opportunities appeared to appeal to investors and analysts. BlackBerry’s stock spiked last spring when analyst Gus Papageorgiou of Macquarie predicted BlackBerry’s stock price could rise to US$45 by 2020 helped by an expanded QNX offering. It jumped again weeks later when Ford announced improvements to its BlackBerry-powered in-car system.

The Baidu deal could lead to more opportunities in the growing Chinese auto market. It is a very material opportunity for technology companies that get wellpositioned with automotive OEMs, CIBC Capital Markets analyst Todd Coupland said.

“The opportunity is global, it’s for a very large market and I think it’s a very solid win for BlackBerry,” Coupland said.

Indeed, Baidu indicated the partnership could speed up the introduction of selfdriving cars.

“We aim to provide automakers with a clear and fast path to fully autonomous vehicle production, with safety and security as top priorities,” Li Zhenya, general manager of the intelligent driving group, said in a statement. “By integrating the BlackBerry QNX OS with the Apollo platform, we will enable carmakers to leap from prototype to production systems.”

For BlackBerry, the deal expands its product offerings for in-car systems. As it stands, BlackBerry’s QNX is the leader in infotainment systems, but executives have pointed to additional revenue opportunities such as cloud services and advanced driver assistant systems.

Baidu started as a search company before branching into areas including artificial intelligence and self-driving. It’s worth about US$85 billion on the Nasdaq.