It’s starting to look like investors might be happier watching BlackBerry the movie than BlackBerry the company.
What happened: BlackBerry is walking back IPO plans for its Internet of Things (IoT) division — which creates in-car operating systems used in 235 million vehicles, among other things — and will promote John Giamatteo, president of its cybersecurity division, to CEO.
- The company will still split its cybersecurity and IoT divisions into two separate units as planned, but a “right-sizing process” will likely mean layoffs.
Catch-up: Giamatteo replaces John Chen, who left the company in November after ten years at the helm. BlackBerry gradually withdrew from smartphones during Chen’s tenure, acquiring a swath of companies that led to its current focus on cybersecurity.
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But most of Chen’s patchwork of acquisitions — across crisis communication, voice encryption, and data syncing — didn’t pay off, leading to floundering stock prices.
- Cybersecurity now makes up most of BlackBerry’s revenue, but growth is stagnant compared to the smaller-but-promising IoT division, which is expected to grow by 18% to 22% over the next three years.
Why it matters: The tech investment market has gotten more and more icy. BlackBerry's board likely wasn't thrilled about the prospect of wringing value out of the stagnant IPO market — which some analysts thought would get a shot in the arm from BlackBerry.
Bottom line: Spinning IoT into its own company was meant to create a more attractive investment by shaking off BlackBerry’s baggage. But the stock price has barely moved since, so other “strategic options” — including a possible sale — might pay off more for shareholders. —JK