What will BlackBerry do with the $815 million now burning a hole in its pocket?

blackberry, tlc, smartphone

Things are looking up for BlackBerry at the moment. The resurgent Canadian software company (and erstwhile phone manufacturer) just prised away an impressive $815 in damages from chipmaker Qualcomm over a royalty dispute.

The press release from BlackBerry doesn’t explain the background behind the dispute, other than to say that it was over royalty payments made from BlackBerry to Qualcomm Incorperated.

The essence of the dispute is that Qualcomm agreed to place an upper-limit on certain royalty payments, and it was unclear if this applied to some large payments made by BlackBerry, which is a long-time Qualcomm customer.

MarketWatch has more details. Apparently, in 2010, Blackberry agreed to pay fixed payments to Qualcomm per device sold. At the time, that made a lot of sense. BlackBerry’s hardware business was still strong, and showed no sign of the steep, precipitous decline that soon followed.

When sales of the iconic smartphones began to flatline, BlackBerry argued that the royalty fees were excessive, and didn’t reflect the current state of the business.

It seems the arbiters agreed with BlackBerry, ordering Qualcomm to cough up $814,868,350. The ruling is binding, and cannot be appealed.

It also isn’t final; the arbiters will meet on May 30, to discuss interest and attorney’s fees. Given the dispute is a long-running one, it’s possible that the headline sum could balloon.

This comes at a time when BlackBerry, once the sick man of tech, is experiencing a lazarine revival. Revenues are up. Losses are down. This is largely thanks to the decision to ditch its hardware business, handing over the reigns to TCL Corporation, in order to focus on software and services.

This is a huge amount of money for BlackBerry. It’s roughly double their Q1 2017 revenue, and several analysts believe that BlackBerry will use the surprise windfall to aggressively expand, with new acquisitions likely.

In a note, Canaccord Genuity analyst Michael Walker said: “With BlackBerry planning to invest for growth in its software businesses, the surprising arbitration award and $815M in cash from Qualcomm will bolster BlackBerry’s balance sheet and increase the likelihood of acquisitions to augment growth.”

Echoing those remarks, TD Securies analyst Daniel Chan said: “We believe any acquisitions to build out BlackBerry’s IoT sales channel would be attractive.”

He also suggested that the income could be used to bolster the company’s sales team. Something that seems prudent when you consider that the public image of BlackBerry is one of a struggling smartphone maker, and not a thriving software and services company.

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