Canadian technology company BlackBerry disclosed on Wednesday its intention to segregate its business operations into two distinct units, namely Internet of Things (IoT) and cybersecurity. The company further revealed plans to pursue an initial public offering (IPO) for its IoT arm in the upcoming fiscal year.
CEO John Chen emphasized the considerable market potential of both the IoT and Cyber businesses. He stated, “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.”
This strategic pivot aligns BlackBerry with a growing trend among corporations, as they opt for streamlined corporate frameworks to offer investors clearer insights into the performance of individual business segments. The decision to bifurcate follows a comprehensive assessment of strategic options for BlackBerry’s diverse portfolio of businesses earlier in May.
This week witnessed a culmination of this trend, with packaged food giant Kellogg Co successfully completing its spinoff. Other industry behemoths such as Johnson & Johnson and General Electric have similarly embarked on unit spinoffs.
Following the announcement, pre-market trading on Thursday saw a commendable uptick in BlackBerry’s US-listed shares, surging over 3%. This positive development marks a notable recovery, considering the over 18% dip the shares experienced following reports in August of a buyout offer from private equity firm Veritas Capital.
In its recently released second-quarter financial report, BlackBerry disclosed a total revenue of $132 million. The IoT division contributed $49 million, while cybersecurity accounted for $79 million—showing a decline from the previous year’s $168 million.
Launched on the stock market in 1997, BlackBerry initially gained renown for its business-centric smartphones, widely adopted by executives, politicians, and a vast user base in the early 2000s. However, in 2019, the company elected to divest its smartphone business and now endeavors to divest its legacy patents associated with mobile devices.
The announcement of the strategic split of BlackBerry into IoT and cybersecurity units and the outlined plan for an IPO for its IoT unit signifies a pivotal moment for the company, as it refocuses its efforts on future growth and aims to rekindle its former successes.