BlackBerry said Monday that it has promoted John Giamatteo, who served as the firm’s cybersecurity president since October 2021, to replace longtime chief executive John Chen. In a press release announcing the appointment, the company also said it has scrapped plans to take its Internet-of-Things business public as a separate company. 

Here’s what you need to know: 

The leadership change: Chen announced his retirement in October, after 10 years as the company’s CEO. During his decade at the helm, Chen transformed BlackBerry from a smartphone company on the brink of bankruptcy to a cybersecurity software firm. Board chair Richard Lynch has been filling in as interim chief executive since Chen stepped down. Lynch will stay on as chair as Giamatteo takes over as CEO.

The backtrack: Shortly before retiring, Chen began discussing plans to take the company’s IoT unit, which operates its auto software business QNX, public as a separate entity from its cybersecurity division. While the board is scrapping the IPO plans, it still intends to separate the IoT and cybersecurity units, which will run as distinct divisions. The decision to cancel the IPO comes amid tepid interest in new public listings. 

The context: Going public with its IoT business, which BlackBerry says is profitable, could have helped attract investors. The unit is a bright spot for the company, supplying in-car software to the world’s 10 largest automakers. RBC analyst Paul Treiber estimated the division was worth US$1.7 billion compared to the cybersecurity segment’s US$450 million in October. “We’re disappointed about the IPO for the IoT business being scrapped, given it is the superior business of the two in our view and would’ve been attractive for investors,” Morningstar analyst William Kerwin said in a note following Monday’s news. 

Angling for a sale? Kerwin took aim at BlackBerry’s cybersecurity business, which he said has “lagged its market and peer group” under Giamatteo’s leadership. Some analysts have said splitting off the weaker-performing division could open it up for a sale. “We continue to see BlackBerry’s cybersecurity business as a potential acquisition target for a larger endpoint protection provider,” Kerwin said in his note. 

The market reaction: BlackBerry’s stock closed down nearly 0.72 per cent Monday on the Toronto Stock Exchange. Kerwin said the shelved IPO likely won’t significantly affect BlackBerry’s “execution and capital allocation,” and that he had hoped for bolder changes with Chen’s retirement.