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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.

RIMdenberg
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



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RE: Even if...
By wind79 on 8/12/2012 8:31:54 PM , Rating: 2
quote:
I was just going to say, "Whatever you do, don't sell to HP."


I would love to see RIM bring HP down with it...


"Can anyone tell me what MobileMe is supposed to do?... So why the f*** doesn't it do that?" -- Steve Jobs














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