It’s been a rough couple of months for the tech sector and that includes Canadian software and security company BlackBerry (BlackBerry Stock Quote, Chart: TSX, NYSE:BB), which just announced a major acquisition to bolster its cybersecurity offerings. But while BB’s remodelling has been progressing well, the company like the sector in general is a no-go zone at the moment, says Mike Newton of Scotia Wealth.
“I’m not in the BlackBerry name right now but certainly [CEO John Chen] is making a big move to turn this into a security company,” says Newton, portfolio manager and director of wealth management at Scotia Wealth, to BNN Bloomberg.
The announcement came last Friday that BlackBerry would be acquiring Irvine, California-based Cylance in a $1.4 billion cash deal, expected to close by the end of BB’s fiscal year in February. Chen said Cylance helps get BlackBerry closer to its goal of being the world’s top cybersecurity company.
“There are a couple of trends in the new generation of IoT, one is that everything wants to talk to each other and the other is security and privacy, especially the latter one is now of paramount importance,” Chen said. “Those are the things that we’ve been doing and Cylance fit that completely, 100 per cent. So this is exciting for us.”
After a positive 2017, BlackBerry’s share price hasn’t fared well in 2018, now down 35 per cent from an early January high of $18.14. The stock has been hit by the general downturn in tech, dropping 22 per cent since October 1.
Newton says that he’s in a wait-and-see mode when it comes to tech stocks, including BlackBerry.
“In this period of time when we’re going through so much carnage in the technology space, I could point to other names that I’d be more interested in on these pullbacks,” he says. “But I’m in a buyer’s strike on the whole space until things get back together.”
“There’s positive development with BlackBerry and I like the turnaround but it’s not a position I’m in right now,” he says.
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