BlackBerry: New CEO Doesn’t Change Our View of Strong IoT, Weak Cybersecurity Divisions

We maintain our $4.90 fair value estimate for shares of no-moat BlackBerry after the firm announced the appointment of John Giamatteo as CEO. The firm also announced a change in its strategic review: BlackBerry will no longer pursue an IPO for a portion of its Internet of Things division and will instead keep IoT and cybersecurity under one umbrella, but completely separate them into two completely independent divisions internally. We don’t foresee a meaningful inflection in the business from either move. We’re disappointed about the IPO for the IoT business being scrapped, given it is the superior business of the two in our view and would’ve been attractive for investors. Giamatteo has been leading BlackBerry’s cybersecurity business for 2 years and that business has lagged its market and peer group. We see shares as fairly valued.