RIM’s woes could finally come to an end after IBM has expressed interest in the former’s enterprise service unit. Considered to be the company’s most valuable asset, it is no surprise that IBM has expressed interest in acquiring the same. Although the approach was only informal (from IBM), this acquisition will add to IBM’s corporate presence. This network makes use of numerous servers to support 18 million BlackBerry phones, and is valued anywhere between $1.5 billion to $2.5 billion according to Berenberg Bank. The variance is because of several included assets within the unit.
RIM however, is patient and will first release the next version of its OS; the BlackBerry 10 OS in 2013 before taking any final decisions on the issue. Since no other company is interested in acquiring this technology the critics expect the sale to take place. Even the company’s stock responded well to this rumour showing a 6.3% rise in its value.
This is not the first attempt that RIM has made at regaining the consumers it lost to Apple’s iOS and Google’s Android. In fact the appointment of the current CEO, Thorsten Heins, was for the exact same purpose. The firm even took advice for financial strategies from the like of JP Morgan Chase and RBC Capital Markets. Heins has made it clear than he is only interesting in licensing RIM’s services rather than selling them. Peter Misek, an analyst at a popular research firm asserted that, separation of the enterprise unit from the hardware would be a herculean task. However, if RIM were to take that path, the unit would fetch the company at least $2 billion. Another analyst claimed that the price in separation would essentially bring down the unit’s value to $1-$1.5 billion.
How would IBM benefit from this deal? This enterprise unit would give IBM control over a fast and secure email system, which is a priority for most corporations around the world. RIM generated revenue of $4.1 billion last year. Added to this the firm has $2.2 billion worth of cash and investments and very less debt. So if the enterprise unit is worth just $2 billion it only implies that the company’s mobile business doesn’t have much value. However IBM’s purchase of RIM’s services would be strategically important for the former as it will only be an extension of IBM’s services. RIM is currently focussed on releasing the Blackberry 10 OS next year in order to reclaim the lost share.
