November 16, 2018 / 12:52 PM / 4 months ago

BlackBerry adds autonomous cars muscle with $1.4 billion Cylance buy

(Reuters) - Canada’s BlackBerry Ltd on Friday raised its bets on the fast-growing areas of autonomous cars and artificial intelligence (AI) with the $1.4 billion purchase of California-based cybersecurity company Cylance.

FILE PHOTO: A sign is displayed on the building Blackberry's offices in Waterloo, Ontario, Canada, May 29, 2018. REUTERS/Mark Blinch

The company’s shares rose as much as 2.8 percent to C$11.98 on the Toronto Stock Exchange.

“What we are good at is financial, government and healthcare verticals ... the one area that I think will have a strong influence (from the deal) is in transportation,” BlackBerry’s Chief Executive Officer John Chen said on a media conference call.

Under Chen, BlackBerry, which dominated the smartphone market a decade ago, has shifted to selling software to manage mobile devices, as well as areas such as driverless cars.

The company’s QNX software allows carmakers to offer a range of features such as infotainment, connectivity, in-car network security, advanced driver assistance system and over-the-air software update platform.

Privately owned Cylance’s software will complement BlackBerry’s software as it uses machine learning to preempt security breaches.

QNX is currently being used by a clutch of companies developing driverless technologies such as automakers Ford Motor Co and Tata Motors Ltd’s Jaguar Cars, as well as technology firms such as Baidu Inc and Nvidia Corp.

About 120 million cars are using BlackBerry’s technology, particularly QNX, Chen said on Friday.

Revenue from BlackBerry’s Technology Solutions segment, which includes QNX, jumped nearly 29 percent to $49 million in the latest quarter.

Cylance’s Chief Executive Officer Stuart McClure said it would be able to leverage BlackBerry’s strength in mobile communications and security to adapt its AI technology.

Cylance, which has over 3,500 active enterprise customers, had been considering an initial public offering, according to a report in Business Insider.

The deal includes the assumption of Cylance’s unvested employee incentives, BlackBerry said.

Cylance will operate as a separate business unit after the deal closes, expected by February.

Reporting by Bhargav Acharya and Debroop Roy in Bengaluru; Editing by Sunil Nair, James Emmanuel and Sriraj Kalluvila

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