Endpoint Detection & Response (EDR) , Endpoint Protection Platforms (EPP) , Endpoint Security

BlackBerry to Separate Cybersecurity, IoT Businesses in 2024

Subsidiary IPO Will Split High-Growth IoT Unit From Low-Growth Cybersecurity Unit
BlackBerry to Separate Cybersecurity, IoT Businesses in 2024

BlackBerry will split its $418 million cybersecurity business and $206 million IoT business into separate, independently operated entities following a strategic review that lasted five months.

See Also: Six Key Trends in MDR 2024: What Top Security Teams are Looking For?

The Ontario, Canada-based vendor will pursue a subsidiary initial public offering for its high-growth internet of things business in the first half of 2024 to help shareholders more clearly evaluate the performance and future potential of each business on a stand-alone basis. The separation will also allow the cybersecurity and IoT businesses to each pursue a distinct strategy and capital allocation policy.

"Separating our principal businesses will improve our ability to create value for all stakeholders," BlackBerry CEO and executive chair John Chen said in a statement. "This new proposed structure will further increase both their operational agility and ability to focus on delivering exceptional solutions to their customers."

BlackBerry's stock is down $0.18 - or 4.23% - to $4.08 per share in trading Thursday, which is the lowest the stock has traded since May 1, when the company launched a strategic review. The proposed split was announced after the market closed Wednesday, after the company had spent several months evaluating strategic alternatives including a range of potential sale structures as well as separating the businesses (see: Proposed SEC Rules Will Force Boards to Double Down on Cyber).

The separation announcement comes a month before Chen's contract expires. He has led BlackBerry since November 2013. BlackBerry's cybersecurity business has been led since October 2021 by longtime McAfee president and chief revenue officer John Giamatteo, and the company's IoT unit has been led since May 2021 by longtime HERE Technologies executive Mattias Eriksson.

BlackBerry's IoT Unit Surges While Security Unit Struggles

The company's cybersecurity and IoT units each have a very different growth and profitability trajectory in recent years. Sales in the cybersecurity unit - which unites endpoint security and endpoint management - dropped 12.4% to $418 million in the fiscal year ended Feb. 28, 2023, and gross margins fell 17.7% to $233 million due to client churn in the product business as well as a drop in professional services sales.

Conversely, BlackBerry's IoT business - which provides technology for connected embedded systems in the automotive, medical and industrial automation market - grew sales by 15.7% in the recent fiscal year to $206 million, and gross margins jumped 14.2% to $169 million. These trends continued in the fiscal quarter ended Aug. 31. BlackBerry's cyber sales dropped 28.8% and IoT sales dipped 3.9%.

BlackBerry's workforce shrank by 4.4% from 3,325 employees on Feb. 28, 2022, to 3,181 employees on Feb. 28, 2023, despite the company stating in spring 2022 that it planned to bring on 250 additional cybersecurity and IoT workers over the next year. Just over half of BlackBerry's workforce is based in Canada, and a little over one-quarter is based in the United States and one-fifth is based in 18 countries outside of North America.

"Separating our principal businesses will improve our ability to create value.'"
– John Chen, executive chair and CEO, BlackBerry

BlackBerry has been giving up market share in the endpoint security space, and the company's share has fallen from 1.5% in 2021 to 1.3% in 2022 despite an 8.6% increase in endpoint security sales to $170.3 million, IDC found. BlackBerry's endpoint security growth rate lagged the market as a whole, which saw 29.2% growth last year. BlackBerry was the 15th-largest endpoint security vendor in both 2021 and 2022.

BlackBerry's cybersecurity practice draws largely from the company's February 2019 acquisition of next-generation endpoint security vendor Cylance for $1.4 billion. The company's cybersecurity offerings include BlackBerry Spark unified endpoint security, BlackBerry AtHoc crisis communications, BlackBerry Alert critical event management, and SecuSUITE secure messaging and phone calls.


About the Author

Michael Novinson

Michael Novinson

Managing Editor, Business, ISMG

Novinson is responsible for covering the vendor and technology landscape. Prior to joining ISMG, he spent four and a half years covering all the major cybersecurity vendors at CRN, with a focus on their programs and offerings for IT service providers. He was recognized for his breaking news coverage of the August 2019 coordinated ransomware attack against local governments in Texas as well as for his continued reporting around the SolarWinds hack in late 2020 and early 2021.




Around the Network

Our website uses cookies. Cookies enable us to provide the best experience possible and help us understand how visitors use our website. By browsing inforisktoday.com, you agree to our use of cookies.