BlackBerry Agrees to Sell Patents (Again), and We Maintain Our Thesis; $4.90 Fair Value Estimate

We maintain our $4.90 fair value estimate for no-moat BlackBerry shares after the firm announced a deal for the sale of its noncore patent portfolio. The agreement represents the pending culmination of a tumultuous two-year process for BlackBerry. We reiterate that we like the decision to sell these noncore patents, from which BlackBerry had generated licensing revenue, to generate cash to invest in the core business. We think the deal is a fair price for the portfolio—we estimate about $500 million in total compensation including profit sharing. We don’t change our thesis on the company and believe even additional cash for investment won’t be enough to inflect a flailing cybersecurity business. We maintain our view that the Internet of Things business is the bright spot for the company. Shares trade below our fair value estimate, but we would point investors to moatier software names and emphasize our Very High Uncertainty Rating.