Shares of BlackBerry spiked 15% in Thursday’s extended market trading amid a report that the Canadian software company has sold 90 patents related to its smartphone technology to Huawei. That’s after the stock closed 23% higher yesterday.
According to a report by Canadian newspaper The Globe and Mail records from the US Patent and Trademark Office (US PTO) showed the transfer of the intellectual property to Huawei. In addition, the transaction was also confirmed by BlackBerry’s (BB) CFO on an investor call, according to the report.
BlackBerry, once a front-runner in smartphones targeted for business customers and users, has gone through a transformation in recent years and is now more focused on selling security software to companies, including automakers, and governments.
In line with its recent strategy, Blackberry last year inked a partnership with Amazon to develop a cloud-based vehicle data platform. According to the multi-year agreement, BlackBerry and Amazon Web Services (AWS), the tech giant’s cloud business, will jointly develop and market its so-called intelligent vehicle data (IVY) platform.
IVY is a cloud-connected software platform, which seeks to provide automakers with a secure way to read vehicle sensor data and create actionable insights from that data both locally in the vehicle and in the cloud. Automakers can use this information to create responsive in-vehicle services to boost driver and passenger experiences. The platform will be built on BlackBerry’s QNX, a vehicle data operating system.
BlackBerry shares have surged 37% over the past year. Meanwhile, the Street has a cautious Hold analyst consensus on the stock’s outlook based on 3 recent Hold ratings. Looking ahead, the average analyst price target of $8 indicates 12% downside potential from current levels.
Meanwhile, Canaccord Genuity analyst Michael Walkley last month raised the stock’s price target to $8 from $6 but maintained a Hold rating, as he expects near-term declines in auto sales for the next several quarters and continues to model BlackBerry’s QNX with a slow and gradual recovery.
“While management has created a cogent long-term strategy and the shares are potentially compelling for longer-term-oriented investors, we continue to await more proof in execution on the new product roadmap, evidence of cross-selling opportunities emerging, growing overall software and services revenue, and the potential for upside to our estimates before becoming more constructive on the shares,” Walkley wrote in a note to investors.
“For F2022, we reduce our revenue estimate from $1,028M to $945M given our more cautious view of the QNX recovery and time necessary for new products to ramp in drive stronger long-term sales growth,” the analyst added. (See BB stock analysis on TipRanks).