Cylance Sale Is A Win For BlackBerry (BB), Here’s Why

Blackberry is selling its AI-powered cybersecurity platform Cylance to Arctic Wolf, a cybersecurity firm specializing in managed security services. The company is set to receive $160 million in cash for the company, in addition to the 5.5 million common shares of Arctic Wolf. BB is booking a massive loss on this purchase, which happened in 2018 for $1.4 billion!

BlackBerry was founded in 1984 and is headquartered in Ontario, Canada. The company was a household name when it came to mobile devices and secure communications solutions, especially for businesses. However, the smartphone revolution, particularly Apple, dealt a big blow to its business.

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The company’s failure to innovate brought it to a juncture where it had to stop being a mobile phone company. As part of a diversification strategy, it pivoted to enterprise software, cybersecurity, data privacy solutions, and Internet of Things (IoT).

The Cylance acquisition was meant to help the company diversify. As things stand, that project didn’t turn out well. Still, all is not lost for BlackBerry. By getting rid of the asset and taking in $160 million in cash, the company can focus on other parts of the business. It will still have exposure to Cylance through the Arctic Wolf stock it is receiving as part of the deal. Perhaps that’s why the stock went up a massive 14% after the news. BB itself echoed the same sentiments through its press release.

…this will help drive BlackBerry’s profitability and allow us to focus on the growth engines in our portfolio.

Arctic Wolf will strengthen its position as a market-leading security operations provider…

The cybersecurity market is poised to grow in the coming years, especially as AI systems become more common and an integral part of the country’s defense system. CrowdStrike’s (CRWD) global outage in July this year, which caused airports and government organizations to shut down, showed the importance of having a good cybersecurity infrastructure. With Cylance in better hands, both BlackBerry and Arctic Wolf can look forward to benefitting from its improved operations.

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Disclosure: None. This article was originally published at Insider Monkey.