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BlackBerry Acquires Good Technology for Mobile Device Management

  • Gerrit De Vynck and Olga Kharif
  • September 05 2015, 7:58am EDT

(Bloomberg) -- BlackBerry Ltd. agreed to buy Good Technology Corp. for $425 million, gaining new mobile device-management customers while removing one of its competitors in that business.

Good Technology, based in Sunnyvale, California, builds applications to help employees work securely from their personal phones. It counts all of the G7 governments and the world’s 10 largest banks and law firms among its 6,200 customers, BlackBerry said in a statement Friday.

The acquisition removes a rival that had taken some of BlackBerry’s clients as more workers switched from employer-provided BlackBerrys to their own iPhones and Android devices.

“Sometimes your best defense is a good offence,” said John Butler, senior handsets analyst at Bloomberg Intelligence. “This is good for BlackBerry in the sense that it gives them greater scale and therefore a greater ability to compete with larger rivals.”

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Bigger tech companies such as SAP SE, Microsoft Corp. and International Business Machines Corp. can sell tools to track mobile devices at cheaper prices by bundling them in with larger software sales, Butler said.

BlackBerry will bring together Good Technology’s secure e-mailing apps with its expertise in helping companies manage and secure thousands of connected tablets and phones, Chief Executive Officer John Chen said on a conference call.

“BlackBerry and Good combined will raise the bar in the enterprise mobility market,” he said. “We are expecting significant operating expense synergies.”

Postponed IPO

Good Technology postponed a planned initial public offering last year because of worsening market conditions, people familiar with the matter said at the time. Selling to BlackBerry makes sense for both customers and shareholders, Good Technology CEO Christy Wyatt said in a phone interview.

Earlier this month, a jury found MobileIron Inc. didn’t infringe Good Technology’s patents and that some of those patents were invalid. That could potentially have impacted the company’s valuation, said Matt Larson, a technology patents litigation analyst with Bloomberg Intelligence.

“The litigation with MobileIron certainly called into question the enforceability of some of these patents and the underlying strength of some of their existing agreements,” he said.

Good Technology’s revenue from intellectual property represented only about $25 million of the $200 million yearly revenue, Chen said.

“It’s not that big of a component,” he said.

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BlackBerry could be in a better position to monetize Good Technology’s patents by bundling them into its existing licensing deals, Larson said.

“When you have the added clout that BlackBerry offers they may be able to bring that licensing revenue up,” he said.

BlackBerry expects to book around $160 million revenue from Good Technology in the first year, after writing down some of the company’s deferred revenue, Chen said. That would help the CEO hit his goal of doubling yearly software revenue to $500 million by March 2016.

BlackBerry rose 0.5 percent to C$9.91 at 1:21 p.m. in Toronto. The acquisition is expected to close later this year.

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