BlackBerry gives up on IPO for IoT business

Canada’s BlackBerry has given up on making an initial public offering (IPO) for its Internet of Things (IoT) business, which was planned for the first half of the next financial year. The intention now is just to create an independent IoT unit.

Last October, BlackBerry’s board and management believed that the IPO could help improve the ability to generate value for both the IoT and cybersecurity businesses by increasing operational agility and focussing on offering specific solutions to customers.

However, on 11 December, BlackBerry announced John J. Giamatteo as the new CEO and member of the Board of Directors. Richard Lynch had served as interim CEO since 4 November 2023 and will now continue as Chairman of the Board. Giamatteo also announced that the IoT and cybersecurity businesses will operate as completely independent divisions, and will no longer carry out an IPO for the IoT unit

Giamatteo was previously head of BlackBerry’s cyber security business unit. Prior to BlackBerry, he was president and chief revenue officer of McAfee. “The Board, with input from its advisors, believes that a full separation of BlackBerry’s IoT and cybersecurity businesses will open up a number of strategic alternatives that can generate more value for shareholders,” says Lynch, BlackBerry’s Chairman of the Board. “Management is committed to moving quickly to complete this reorganization that will focus both business units on their respective markets, as well as on the ability to make quick and flexible decisions.”

To assist in the separation process, BlackBerry is in the final stages of selecting a consultancy firm.

History of change

In the early days of mobile telephony, BlackBerry was considered almost synonymous with a mobile phone. A few years later, much began to be said about how BlackBerry missed the boat by not anticipating the demand from consumer users in the face of the revolution started by Apple.

More recently, BlackBerry can be studied as a hardware company that has migrated into the world of software. In 2016, BlackBerry abandoned its focus on smartphones and adapted its business model to trends in software and the Internet of Things (IoT).

One executive, who recently announced that he would retire as executive chairman and CEO of BlackBerry in November 2023, has a lot to do with this story of change. John Chen was named by BlackBerry’s Board of Directors as the person responsible for having “saved BlackBerry and repositioned it as a software company with leading cybersecurity and IoT technologies”.

“BlackBerry was a few days away from bankruptcy when John Chen took over the leadership of the company in 2013,” recalls David Reilly, former CIO of Bank of America and a friend of Chen’s. “John saw the company differently. He saw BlackBerry as a software company in a world increasingly defined by software. His vision for the company, which he realized during his first 10 years of leadership, changed everything,” comments Reilly.

An episode of the Deep Purpose podcast promoted by Inc. Magazine features an extensive interview with Chen in which he tells how he knew he couldn’t compete with Apple or Google in the field of smartphones and decided to turn BlackBerry into a software company, initially focusing on cybersecurity. “The emotion of seeing the hardware — the telephony business — die under my supervision was the hardest. I also knew the emotions of our engineers and our employees. It’s more than just a product. It’s a way of life. So I knew that many employees would be devastated when I made this decision,” admits Chen.

Speaking to investors, Chen said that BlackBerry’s success now lies in providing security and connectivity building blocks to achieve the convergence of IT cybersecurity and the Internet of Things. “The bottom line is that we’ve been pursuing this IoT and cybersecurity strategy as two really high-growth markets that will come together to reach the full potential of the ‘smart world’,” he explained.

In a farewell letter to BlackBerry employees, Chen emphasized that he is proud to have kept the company alive and to have defined a strategy that has kept it true to the mission and values defined at its foundation. He said that BlackBerry now has a unique opportunity to build a reliable, software-defined world.