Despite recent sell offs, the tech sector has continued to be one of the best performing sub-segments of the economy for those looking to put their money to work long term. The largest of these companies (think Apple Inc., Amazon.com, Inc., and Facebook Inc.) have outperformed many of their smaller peers, leading most of the discussion among investors and dominating financial news headlines, for good reason.
That being said, smaller Canadian tech company Blackberry Ltd. (TSX:BB)(NYSE:BB) has certainly provided many investors with an interesting contrarian play, given the stock’s 30%+ decline since the beginning of the year on less than impressive earnings and investor impatience with the company’s ability to show consistent and growing profits on a quarterly basis.
This past week, BlackBerry announced the acquisition of a smaller cybersecurity firm Cylance Inc. for $1.4 billion U.S., more than half the company’s cash position at presence. BlackBerry’s CEO John Chen has indicated that this move will bolster BlackBerry’s strong position in the cybersecurity segment of the tech market, allowing the company to maintain and grow its self-driving car technology segment and its QNX software platform which the company hopes will drive long-term growth for the once-smartphone maker.
Cylance produces AI-related software solutions which prevent cyber attacks for connected devices in the internet of things (IoT) space, where BlackBerry is gaining a more significant foothold. The deal represents an approximate 10x multiple on Cylance’s 2018 revenue, a relatively steep price to pay for a company that many expected could go public in the near future.
Invest wisely, my friends.
