BlackBerry's $1.4 Billion Cylance Acquisition Will Continue to Cause Problems
Amidst better-than-expected fiscal second-quarter results, the performance of BlackBerry's (NYSE: BB) endpoint security solution Cylance paled in comparison to last year's hopes for high growth. Going forward, Cylance may still disappoint investors despite management's optimism. Here's why.
During fiscal Q2, ending on Aug. 31, BlackBerry grew its revenue by 6% to $259 million. The licensing business fueled that growth with $108 million of revenue, up 42% year over year. In contrast, the software and services segment declined 10% from the prior-year period to $151 million.
Granted, the challenging situation in the automotive industry due to the coronavirus had a negative effect on the company's connected embedded systems solution, QNX. But BlackBerry is also facing difficulties with the endpoint security specialist Cylance, which it acquired for $1.4 billion in cash in February 2019. During the earnings call that followed the acquisition, CEO John Chen had highlighted: "This acquisition will be a key investment to accelerate BlackBerry's future software and services growth."
Source Fool.com
