With patents at the center of the controversy, BlackBerry's (NYSE:BB) lawsuit against Facebook (NASDAQ:FB) resulted in a protected settlement with BlackBerry on the winning side. Now, consumers and investors wonder whether the duo will develop a partnership through a high-valued deal.
Will BlackBerry make a deal with Facebook? What would the outcome look like for the two tech companies if they reach a deal?
A recap of the BlackBerry lawsuit against Facebook
BlackBerry sued Facebook in 2018 over patent concerns. The company said that Facebook was using BlackBerry innovations in the Facebook messaging app. Facebook didn't back down and chose to challenge the patents in court. Facebook suggested that BlackBerry was infringing on its voice message patents.
The lawsuit wasn't resolved until January 19, 2021, nearly three years after it launched. Facebook ultimately settled, but part of the terms of the settlement was that BlackBerry couldn't divulge the details of that settlement. As a result, the general public is largely in the dark about the outcome, aside from the fact that Facebook backed down.
BlackBerry announces negotiations with a large North American company. Is it Facebook?
In the earnings report for the fourth quarter of fiscal 2021, BlackBerry shared some juicy details about a partnership in the works.
According to the report, "During the quarter BlackBerry entered into an exclusive negotiation with a North American entity for the potential sale of part of the patent portfolio relating primarily to mobile devices, messaging, and wireless networking. [BlackBerry] has limited its patent monetization activities due to the ongoing negotiations. If [BlackBerry] had not been in negotiations during the quarter, we believe that licensing revenue would have been higher."
The report hinted at the negotiations mainly to inform investors why the company's earnings were lower than they might have expected. However, many retail investors wonder about the details of the aforementioned "exclusive negotiation."
It isn't clear whether the negotiation involves Facebook, but it would be a mistake to eliminate that option from the pool.
Refer to executive buying patterns for hints about the deal
While not a surefire way to get information, one way to gather hints at BlackBerry's future is to look at executive stock trading behavior. You can screen insider trading behavior via a platform like OpenInsider, which allows you to look up ticker symbols of stocks and narrow by insider name or CIK.
Through this method, you're mostly looking for big changes in ownership from multiple executives, not just an individual person rebalancing their portfolio to increase liquidity.
What will happen to BB stock in a potential FB deal?
If the companies work in tandem in multi-million or multi-billion dollar deals, BB and FB stocks could see big swings. BlackBerry's 8.08 percent drop on June 16 is nothing compared to the stock's 95 percent YTD gain. As a meme stock target, volatility is imminent, but a big deal with Facebook or another major player could add some stability to BlackBerry stock.