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BlackBerry Stock Looks Enticing as an Acquisition Play as Its Patents Add Up

Three of BlackBerry’s (NYSE:BB) new partnerships, announced on Oct. 12, show that more large, prominent tech firms are starting to use BlackBerry’s IT security products. Over time, these alliances should raise the company’s top and bottom lines and drive BB stock up in the process.

A BlackBerry (BB) sign out front of a corporate office in Silicon Valley, California.
Source: Shutterstock

Moreover, I think that these deals could result in BlackBerry becoming a takeover target at some point down the road.

Also worth noting is that the company is effectively integrating artificial intelligence into its security products, making them much more appealing.

As InvestorPlace writer William White explained on Oct. 13, BlackBerry has teamed up with “Alphabet’s (NASDAQ:GOOGL,GOOG) Google, as well as Qualcomm (NASDAQ:QCOM) to advance next-generation automotive cockpits.”

Under the deal, BlackBerry will provide its QNX Hypervisor and its VIRTIO-based reference design for use in  Android Automotive OS on the 3rd Generation Snapdragon Automotive Cockpit Platform.

BlackBerry explained that the Hypervisor and VIRTIO will run right out of box easily delivering software upgrades to vehicles even after they’ve been bought and taken home. QNX also allows separate Android applications to utilize the same data.

QNX will make Android Automotive completely secure and impervious to dangerous hacks without compromising the quality of its apps.

Qualcomm (NASDAQ:QCOM) is providing its Snapdragon Platform for the system.

As Google and Qualcomm get used to working with BlackBerry and better appreciate the impressive qualities of the Canadian company’s QNX operating system, they will likely look to team up with BlackBerry much more in the future.

Over the longer term, BlackBerry’s financial results should get a big boost from those projects.

BlackBerry Is Working With Okta

BlackBerry is teaming up with several companies, including Okta (NASDAQ:OKTA) in an attempt to enhance its extended detection and response ecosystem.

Known as XDR, the products allow users to integrate multiple tools into security platforms that defend an organization’s entire IT system.

Unlike competing ecosystems, BlackBerry’s XDR emphasizes the prevention of threats rather than combatting attacks after they’re underway, the company explained. BlackBerry’s system will integrate the capabilities of its partners, including Okta.

A leading identity management company, Okta says that it has over 13,000 customers.  Its fiscal 2021 revenue came in at over $835 million, and its market capitalization is  above $38 billion.

As with Google and Qualcomm, Okta’s partnership with BlackBerry will likely result in it appreciating the effectiveness of BlackBerry’s products to a greater extent. Consequently, Okta is more likely to work with BlackBerry in the future, enhancing BlackBerry’s products and lifting its financial results and BB stock.

A Potential Takeover Target and AI

As Google, Qualcomm, and Okta gain a greater appreciation of the strength of BlackBerry’s IT security offerings, they are more likely to consider buying BlackBerry.

“There’s a global #cybersecurity skills gap today. The experts you need simply don’t exist. BlackBerry’s managed services begin to close the gap,” BlackBerry’s Chief Information Security Officer John McClurg was quoted as saying in a Tweet from the company’s account.

In other words, companies can’t hire enough cybersecurity experts to protect themselves from ruinous hacks, so they need top-notch products like those of BlackBerry to defend themselves.

As a result, there’s tremendous demand for BlackBerry’s products, making the company a potentially alluring takeover target. Additionally, BlackBerry’s systems will enhance the attractiveness of an acquirer’s products more by making them more secure and private.

On the AI front, BlackBerry announced that it had added “AI-powered mobile threat defense (MTD), user behavior risk analytics, and network analytics technology” to its managed service security solution that it calls BlackBerry Guard 2.0.

“With organizations increasingly moving to a remote or hybrid workforce, keeping employees safe and secure no matter where or how they work should be paramount,” BlackBerry’s Executive Vice President of Product Engineering, Billy Ho said in a statement. “Having a comprehensive offering that can rapidly adapt to the changing threat landscape is critical.”

In general, AI is enabling greater capabilities than ever thought possible previously. Consequently, I’m sure that the continued integration of Cylance’s AI tools into BlackBerry’s products will greatly increase the attractiveness of its systems.

The Bottom Line on BB Stock

The news that BlackBerry announced on Oct. 12 should lift the company’s financial results and BB stock over the longer term. They also greatly increase the likelihood that the company will be acquired at some point in the future.

Given these points, as well the company’s tremendous opportunity in connected cars and its upcoming lucrative patent sale, I definitely recommend that longer-term investors buy BB stock.

On the date of publication, Larry Ramer held a long position in BB stock. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines

Larry has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.

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