BlackBerry, the Canadian technology company that once dominated the smartphone market, announced on Wednesday that it plans to separate its Internet of Things (IoT) and cybersecurity business units and target a subsidiary initial public offering for the IoT business next fiscal year. The company said the move would increase its operational agility and focus on delivering exceptional solutions for both segments.
BlackBerry’s IoT business includes QNX and Spark
The IoT business unit of BlackBerry includes its QNX operating system, which is used in automotive and industrial applications, and its Spark platform, which provides secure connectivity and data management for IoT devices. The company said it expects the IoT business to generate revenue of $200 million to $250 million in fiscal 2024, with a gross margin of 80% to 85%.
The company also said it aims to take the IoT business public in a subsidiary IPO next fiscal year, subject to market conditions and regulatory approvals. The company said it believes the IPO would unlock the value of the IoT business and provide it with greater access to capital and strategic partnerships.
BlackBerry’s cybersecurity business offers software and services
The cybersecurity business unit of BlackBerry offers software and services for endpoint protection, endpoint management, encryption, mobile threat defense, and secure communications. The company said it expects the cybersecurity business to generate revenue of $300 million to $350 million in fiscal 2024, with a gross margin of 75% to 80%.
The company said it intends to retain full ownership of the cybersecurity business and continue to invest in its growth and innovation. The company said it sees significant opportunities in the cybersecurity market, especially as remote work and digital transformation increase the demand for secure solutions.
BlackBerry’s CEO says the separation will benefit both businesses
BlackBerry’s CEO John Chen said the separation of the IoT and cybersecurity businesses would benefit both segments and create value for shareholders. He said both businesses address large and growing market opportunities and have strong competitive advantages.
“Both the IoT and Cyber businesses … 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,” Chen said in a statement.
BlackBerry’s shares rose more than 4% in after-hours trading following the announcement. The shares have fallen more than 18% since Reuters reported in August that private equity firm Veritas Capital had made an offer to buy the company.
BlackBerry said in May it would consider strategic options for its portfolio of businesses that could include the possible separation of one or more of its businesses. Last year, it pulled the plug on its smartphone business and has since been trying to sell its legacy patents related to its mobile devices.
The company went public in 1997 and soon became popular for its ubiquitous business smartphones, which were toted by executives, politicians and legions of fans in the early 2000s. However, the company failed to keep up with the rise of touchscreen devices from Apple and Samsung and lost most of its market share.
Last week, the company reported its second-quarter results and posted total revenue of $132 million, down from $168 million a year earlier. IoT revenue was $49 million, while cybersecurity revenue came in at $79 million.
