BlackBerry (BB): The IoT Spin-Off Play

1. Executive Summary

BlackBerry is no longer a phone company; it is two distinct software businesses trapped in a conglomerate structure. The thesis rests on the "Sum of the Parts" (SOTP) unlocking value, specifically the separation/IPO of the IoT division (QNX) which dominates the automotive operating system market.

Key Thesis Points

1. QNX Dominance: QNX is the "Windows of Cars." It runs in 235M+ vehicles, powering dashboards, ADAS, and safety systems. It has near-monopoly status in safety-critical RTOS (Real-Time Operating Systems).
2. IVY Optionality: The partnership with Amazon AWS (BlackBerry IVY) attempts to create an "App Store" for vehicle sensor data. If successful, this is high-margin recurring SaaS.
3. Cybersecurity Turnaround: The Cylance acquisition has been a drag, but stabilization or a sale of this division would remove the "conglomerate discount."

2. Business Overview

• IoT (QNX): High growth, high margin royalty model. Embedded in cars, medical devices, robotics.
• Cybersecurity: Endpoint protection (Cylance), secure comms (AtHoc). Struggling against CrowdStrike/SentinelOne.
• Licensing: Legacy patent monetization (lumpy, decaying).

3. Financial Analysis

(See Financials Tab for live data)

• Revenue Split: Roughly 40% IoT, 55% Cyber.
• Profitability: Often bordering on breakeven/loss-making due to high R&D and Cyber sales costs.
• Cash: Balance sheet is adequate but not a fortress.

4. Valuation

• SOTP: IoT peers trade at 8x-10x sales. Cyber peers trade at 4x-6x. BlackBerry trades at a fraction of this blended multiple due to "complexity penalty."
• Catalyst: The announcement of a formal split or IPO of the IoT division is the primary price driver.

5. Risks

• Android Automotive: Google is aggressively pushing Android Auto OS into the dashboard, threatening QNX's infotainment stronghold.
• Management Execution: History of missed targets and delayed product launches.