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Manufacturing Technology

Will BlackBerry’s Latest Move Benefit Investors And Businesses?

By TD NewsDesk

TD NewsDesk

Updated on Thu, Oct 5, 2023

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It’s been a while since we’ve seen messages like these floating around social media, hasn’t it?

Do you remember the trend that BlackBerry set off with their phones that caught the attention of businesspeople, celebrities and politicians in the 2000s? #BlackBerryMessenger

Of course, this comes as a blast from the past, as the company, which once captivated the smartphone market, shut down its smartphone segment last year and even sold non-core patents and patent applications for up to $900 million, as per reports.

In the meanwhile, though, BlackBerry Limited engaged itself in numerous businesses, including cybersecurity and IoT (Internet of Things). In fact, Gartner Peer Insights named BlackBerry a 2023 Customers’ Choice for Endpoint Protection Platforms!

Now, the company has a rather big announcement regarding these ventures. Let’s explore:

What Did BlackBerry Announce?

  • On Wednesday, October 4, BlackBerry Limited released a press statement in which it said it plans to separate its business units, i.e., its IoT and cybersecurity business, making them “two independently-operated entities”

  • The idea is to drive enhanced shareholder value through a separation and a range of potential sale structures.

  • Furthermore, it will even move to offer an initial public offering (IPO) for its IoT business in the next fiscal year.

  • Moving back to the month of May, BlackBerry revealed intentions to consider strategic options regarding its businesses. At the time, it was reported that BlackBerry could separate its businesses.

  • The decision was made in consultation with the board of the company and its advisors, Morgan Stanley and Perella Weinberg Partners.


How Has BlackBerry Been Performing?

  • BlackBerry saw a rise of more than 4% in trading, which stands in contrast to the fall it witnessed in August, after reports state Veritas Capital made an offer to buy the company.

  • In terms of earnings, Q2 2023 saw a total revenue of $132 million for the company, which was less than the $168 million it made the previous year.

  • This included a revenue of $49 million for its IoT business and $79 million from the cybersecurity segment.


What Did BlackBerry Say About The Demerger?

  • Speaking on the move, John Chen, the CEO of BlackBerry, said, “The Board and management believe that separating our principal businesses will improve our ability to create value for all our stakeholders.”

  • [Contd.] “Both the IoT and Cyber businesses have leading technology and talent and address large and growing market opportunities. This new proposed structure will further increase both their operational agility and ability to focus on delivering exceptional solutions to their customers.”

  • A statement released by the company on the move reads, “BlackBerry believes that a separately-traded IoT subsidiary will enable shareholders to more clearly evaluate the performance and future potential of BlackBerry’s principal businesses on a standalone basis, while allowing each business to pursue its own distinct strategy and capital allocation policy.”

Blackberry is the latest in a line of businesses looking to separate their business units in a bid to seek better corporate structures and enhance investor evaluations.

This includes companies like Kellogg Company splitting into Kellanova and WK Kellogg Co (name retained), Johnson & Johnson spinning off into Kenvue and Johnson & Johnson and General Electric splitting into three entities, GE Aerospace, GE Vernova and GE HealthCare Technologies (GEHC).

Do you think BlackBerry will achieve success with this demerger? Will BlackBerry be more successful in both segments, IoT and cybersecurity, than before?

Let us know in the comments below!

First published on Thu, Oct 5, 2023

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