BlackBerry Sells Legacy Patents to Catapult for $600M

BlackBerry (TSE: BB) announced on Monday that it would sell its non-core patent assets to Catapult IP Innovations Inc., a Delaware company, for a fixed amount of $600 million.

Patents that are essential to BlackBerry’s current core business operations are excluded from the transaction.

BlackBerry said it could take up to 210 days for the transaction to receive all necessary regulatory approvals.

Cashing In on Intellectual Property

The Canadian group specifies that the patents assigned relate to its historical assets in mobile devices, telephone messaging, and wireless networks.

BlackBerry, now refocused on security software and services for businesses and public authorities, stresses that patents essential to the pursuit of its activities are not affected.

Catapult is a special purpose vehicle created with the sole intention of acquiring BlackBerry patent assets.

The company has notably financed itself through the issue of a long-term bond for an amount of $450 million.

Wall Street’s Take

On December 23, Scotiabank analyst Paul Steep kept a Sell rating on BlackBerry with a $7.50 (C$9.56) price target following the company’s Q3 results.

Steep said the results fell short of its revenue expectations. Licensing revenue was higher than expected, but this was offset by cybersecurity and IoT, which were below expectations. The analyst believes that the recent share price appreciation “appears to be overdone in the short term given the fundamentals of the business.”

Overall, BlackBerry scores a Moderate Sell rating among Wall Street analysts based on one Hold and three Sells. The average BlackBerry price target of C$9.87 implies 2.2% downside potential to current levels.

TipRanks’ Smart Score

BlackBerry scores a 1 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns are likely to underperform the overall market.

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