Granted, former mobile device leader turned general tech firm BlackBerry (NYSE:BB) (TSE:BB) is not what it used to be. However, it’s still in the field, and it’s still making things happen. In fact, it just landed a new contract with the United States government. But despite this new move, investors aren’t happy and pulled enough from BlackBerry’s market cap to send it down fractionally in the closing minutes of Wednesday’s trading session.
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The deal in question, meanwhile, comes from the Department of Homeland Security, which awarded its contract for a new Personnel Emergency Notification System (PENS) to BlackBerry. The contract has a seven-year duration and is on Infinite Delivery, Indefinite Quantity (IDIQ) terms. BlackBerry’s part in this arrangement features its AtHoc tool, which will—when coupled with the efforts of a larger partnership—produce a way for the DHS to establish a department-wide communications system. Since AtHoc is currently used by 75% of the United States government as it sits, the move was a fairly natural fit.
It’s hard to see why investors would pull their capital out over a likely profitable deal that only serves to expand BlackBerry’s connection with the U.S. government. However, there’s probably a better explanation: last week’s move to split the company. The move to separate BlackBerry’s cybersecurity business from its Internet of Things (IoT) unit might leave the two units more focused, but they’re already sorely diminished from what they were. However, with BlackBerry’s IoT revenue at $49 million and cybersecurity at $79 million, the split-off units may be better off than some expect.
Is Blackberry a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on BB stock based on four Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average BB price target of C$6.45 per share implies 31.88% upside potential.
