BlackBerry considering breaking up its businesses to improve revenue, cash flow

BlackBerry building
BlackBerry’s year-over-year revenue declined by 18 percent.

BlackBerry is considering breaking up its businesses as it reviews its portfolio.

On Monday, BlackBerry announced it will initiate an assessment of the corporation’s businesses as it explores “strategic alternatives to drive enhanced shareholder value.” Among these alternatives include the potential separation of “one or more of BlackBerry’s businesses.”

BlackBerry CEO said the review is meant to deliver revenue growth and improve its cash flow.

This review was implemented as BlackBerry’s growth has stalled. In March, it lowered its fourth-quarter and full-year revenue expectations for its cybersecurity business, citing macro challenges as the key factor for the decline.

BlackBerry reported $151 million in total company revenue for its fiscal 2023 year. For comparison, the company posted $185 million in year-over-year revenue in 2022. This represents an 18 percent decline.

BlackBerry, which is traded on both the Toronto and New York (NYSE) stock exchanges, has also seen its share price drop in the last year. Though its share price on the NYSE climbed by 11 percent since the review was announced on Monday, currently trading at $4.10 USD, it has also gone down by 30 percent within the past year. To compare, BlackBerry was trading at $5.86 USD in May 2022.

John Chen, executive chairman and CEO of BlackBerry, said the review is meant to deliver revenue growth and make significant improvements to its cash flow. While BlackBerry expects this plan to benefit shareholders, Chen said that “we do not believe that this is fully reflected in the market’s current valuation of the company.”

After losing out to Apple and Samsung for dominance in the smartphone market in the mid-2010s, BlackBerry acquired a number of companies and expanded to other verticals in the technology sector.

In addition to its patent-licensing segment, BlackBerry is now made up of several different businesses. Based in Waterloo, it provides connected vehicle software through QNX, which it acquired from Harman International in 2010 for $200 million, as well as cybersecurity and device management solutions.

The rise and fall of BlackBerry has been adapted to film, set to be released in theaters across the United States and Canada on May 12.

BlackBerry said its Board has not set a timetable for completing the review. Further, it said “there can be no assurance that the process will result in any transactions.”

BlackBerry will continue its previously announced sale of all of its non-core patents and patent applications to Malikie Innovations Limited, in a deal worth $900 million.

Featured image courtesy BlackBerry.

Charlize Alcaraz

Charlize Alcaraz

Charlize Alcaraz is a staff writer for BetaKit.

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