BlackBerry shares up 4% after Facebook deal for WhatsApp

BlackBerrysharesrose more than fourper cent Thursday on news of Facebooks purchase of mobile messaging service WhatsApp.

The $19 billion US in cash and stock Facebook is paying for WhatsApp seen as a staggering sum by traders suggests that the market may have underestimatedthe value of BlackBerrys BBM messaging system.

BlackBerry stock was up 4.1per cent to close at $10.41on the TSX. The shares wereup 3.8per cent to $9.35US in U.S. trading.

The spike began overnight, after Facebook reported its purchase of WhatsApp, a move seen as a way of retaining teen and young adult users who engage in online conversations outside of Facebook.

BlackBerrys BBM rolled out to iPhone and Android users last year and now has more than 80 million users, compared to 450 million on WhatsApp.

TheWhatsApp deal casts new light on the value of BBM, prized for its enhanced security.

The high price points to the value of messaging systems as a way of attracting new users, said Alan Lysne, entrepreneur-in-residence for the digital media program at the Ryerson University in Toronto.

"You know it seems to be the new battleground for building a new user base," he said in an interview with CBC News. "Obviously BlackBerry has benefited from the news and Ithink any of the independent messaging companies out there that havent yet been acquired start to become a little more interesting."

At a $19 billion price tag, Facebook is paying $42 per user for WhatsApp.

TD Securities analyst Scott Penner upgraded his own estimate of the value of BBM upwards to $800 million or $10 per user. In a note to investors, he said the Facebook deal does highlight the value of messaging platforms.

BlackBerry CEO John Chen has said BBM is one of the companys core assets.

Tech analyst Carmi Levy reflected on the changing culture at the Waterloo, Ont.-based smartphone company, as reflected by Chens swift reaction to T-Mobiles anti-BlackBerry ad campaign, after the U.S. carrier invited users to trade in their BlackBerrys for an iPhone.

Levy said he found Chens angry retort to T-Mobile refreshing.

I think he was fully justified and I think thats what you have to do. Given the context and the history of how BlackBerry has traditionally operated, its refreshing to see, he told CBC News.

If this had happened two, three years ago, the company would have simply said and done nothing. They would have let the firestorm play out outside of their walled garden.

Levy said it is reassuring to BlackBerrys enterprise customers to have a CEO who is outspoken in defending his product. It marks a different culture and mindset at the company,he said.

In many respects, the old BlackBerry is gone, dead, buried and were looking at the existence of a different, new BlackBerry.