Print 24 comment(s) - last by Azethoth.. on Aug 13 at 8:08 PM

No potential buyers have expressed interest in the phone unit

Waterloo, Ontario-based RIM is facing a daunting task by trying to make its next generation BlackBerry – which is running the new QNX-derived BlackBerry 10 operating system -- a success.  Due out next year, RIM must somehow trying to jump over a series of high hurdles including impotent managementweakening brand image, a crowded market, and a significantly shrinking engineering department.  

To be successful, RIM must beat rivals like Google Inc. (GOOG), Samsung Electronic Comp., Ltd. (KSC:005930) and Apple, Inc. (AAPL) who have proven success in consumer smartphone sales, as well as struggling, but deeper-pocket players like Microsoft Corp. (MSFT).

If the much-hyped and much-delayed BB10 platform is unable to beat the rest of the field in features and revive sales -- an outcome expected by many -- RIM's leadership will likely be forced into the option they have resisted the most -- a break-up and sale.

In a new report by Bloomberg, two sources close to RIM and the independent bank review panel -- the Royal Bank of Canada (TSE:RY) and JPMorgan Chase & Comp. (JPM) -- it hired to assess its options say that International Business Machines, Inc. (IBM) has approached RIM with serious interest to purchase its enterprise division.  IBM is one of the enterprise technology sphere's greatest powers and it arguably has the experience to repurpose the unit, hence this seems like a reasonable fit.

IBM servers
IBM is a top enterprise service and hardware provider. [Image Source: IBM]

But analysts say the potential sale will likely be put on hold while RIM waits to see whether BB10 finds fortune or failure.  Adnaan Ahmad, an analyst at Berenberg with a sell rating on RIM’s shares, comments, "If they were to offload this, they are offloading their jewel.  They want to give BlackBerry 10 a go, so I don’t think this would happen until next year."

That could actually benefit IBM, as failure of BB10 may lead to greater desperation at RIM and a fire-sale price for this prized unit.  The unit, which made $4.1B USD in service fees charged to mobile carriers in 2011, is currently valued at $1.5-2.5B USD.  But that value could dip lower depending on the fortune (or more aptly, lack thereof) of BB10.

IBM is reportedly considering gutting the Rimdenberg. [Image Source: Jason Mick/DailyTech LLC]

If the sale happens, the big question is who -- if anyone -- will want the phone unit.  No parties, according to the Bloomberg sources, have expressed interest in buying all of RIM since the review.  Likewise, interest in buying the struggling phone unit has been non-existent.

While waiting to sell may ultimately burn shareholders by devaluing the phone and enterprise service units, in a way, long-term shareholders don't have much more to lose.  A share of RIM stock is today worth about 1/20th of what it was traded for back when the company was popular and profitable in 2008.

Source: Bloomberg

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: IIt would be cool if...
By JasonMick on 8/10/2012 12:40:39 PM , Rating: 3
MS bought RIM's enterprise email service. This would give MS an easy push to gain momentum in the smartphone world.
That would be a decent pairing too. Microsoft might be a bit skittish, though, after Nokia of taking on more dead weight.
Apple or Google would work well too. Just someone with a good product already in the smartphone arena... Not IBM.

Usually I agree with your retro', but IBM is in fact very much in the "smartphone arena". It provides a great deal of services and hardware to carriers like Verizon, AT&T, and T-Mobile.

To be fair, IBM isn't visible that's probably why you don't automatically realize how deep in the mobile space it is. RIM would be the same way if it wasn't for its BlackBerries which make it a consumer product-maker.
One thing I am pretty sure of, regardless of what happens, RIM will be sold off. They just cant execute anymore and hte smartphone industry is too full of companies that can, and are executing.
True. Honestly, I would LOVE for BB10 to succeed, but against Jelly Bean's successor, Windows Phone 8, and the brand strength of Apple, I just don't see BB10 as being something many consumers would want, even if it is much better than BB7,

A sale is a safe bet in my estimation.

RE: IIt would be cool if...
By retrospooty on 8/10/2012 12:56:03 PM , Rating: 2
Agreed... I didnt mean that IBM wasnt at all involved, I meant that I hope someone with an actual purchasable product on the market. MS obviously because they already own the enterprise market from an IT/Server perspective, so mobile makes an easy and trusted addition. Apple or Google, simply because they are both huge players that would quickly benefit from having a foothold in enterprise.

Picture this Apple, Google or MS buys RIM and announces that Blackberry mail service will be available on only their platform. It would be huge. The software is already developed. RIM has been toying with licensing BES to other makers for years. There is even a working version on the Palm OS. That's Palm OS5, not WebOS to give you an idea how long it's been toyed with. RIM just always wanted too much money so no-one bought into it.

RE: IIt would be cool if...
By Lord 666 on 8/10/2012 6:30:39 PM , Rating: 2
Cisco would be a more logical fit than IBM.

RE: IIt would be cool if...
By TakinYourPoints on 8/11/2012 12:16:19 AM , Rating: 1
Usually I agree with your retro', but IBM is in fact very much in the "smartphone arena". It provides a great deal of services and hardware to carriers like Verizon, AT&T, and T-Mobile.

Right, companies that know near nothing about ease of use in their own products or custom UIs.

Apple or Google would be much better suited.

RE: IIt would be cool if...
By millerm277 on 8/12/2012 2:04:22 AM , Rating: 2
That's not what IBM does, or would ever think of being involved in.

They do back-end stuff. The systems, servers, infrastructure that supports things like Cellular networks, company IT departments, etc.

IBM does not do anything consumer-oriented, and doesn't want to be involved in it.

"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki