Technology: What can save Blackberry-maker RIM

Waterloo: Research In Motion, the maker of the BlackBerry, is in steep decline. The company, once the crown jewel of the Canadian technology industry, is now worth 1 percent of Apple's market capitalization. One way for RIM to halt the downward tailspin: he could sell himself to a competitor or a financial company. But that step up to buy RIM, and why?

Late Tuesday, the company said it expected to post an operating loss for the current quarter, a sign that BlackBerry sales fall even faster than analysts expected. On Wednesday, the company's stock hit its lowest level since 2003, the year RIM went from making two-way e-mail pagers to smartphones.

The stock fell 93 percent from their peak in 2008. Since then, the BlackBerry's dominance as the smartphone for on-the-go merchants have been eviscerated by Apple Inc. 's iPhone, and more recently, by phone running Google Inc.' s Android software. Research firm IDC says BlackBerrys now make up 6.4 per cent of the global smartphone market, a third of what they had for two years.

At that time, the company's financial performance has suffered. RIM reported a 25 percent revenue decline in the last fiscal quarter, to $ 4.2 billion from $ 5.6 billion. For the full fiscal year that ended on March 3, he won a $ 1.2 billion, or $ 2.22 per share, on revenue of $ 18.4 billion. That is pure income of $ 3.4 billion, or $ 6.34 share, on revenue of $ 19.9 billion in fiscal 2011.

RIM has issued the dire warning about its business Tuesday, adding that it will put off a "significant" number of employees.

Despite this, the company is challenging. Chief executive, Thorsten Heins, says he can turn things around with the help of recent smartphone software. Heins joined RIM four years and was most recently its chief operating officer. He replaced co-presidents Balsillie and Mike Lazaridis in January after the company lost tens of billions in market value.

"My letter from the board of directors is very clear: long-term value creation with RIM," Heins told The Associated Press in an interview at the company headquarters in Waterloo, Ontario, earlier this month.

Analysts give RIM has just a little bit of out of the crisis. In order to hedge its bets, the company hired bankers to look at their options. It is not actively seeking to sell itself, Heins said, but want to be ready.

"We are wise, because we know the situation is a little difficult," Heins said. "So we just looked at all could be an option. This does not mean that we are drawing on these options. But we have to understand ... what is our field of action, that we might take in case necessary?"

As RIM's prospects worsen, last year marked a turning point in the way analysts estimate rims value. Rather than treat it as a company with a future, they began to look at it as a collection of pieces that could be split up and sold separately to the highest bidder.

Michael Walkley at Canaccord Genuity believes most of the company's value lies in the monthly fee it receives from phone companies in exchange for running the systems that deliver e-mail and Web pages to BlackBerrys.

RIM has 78 million users connected to this system, but Walkley estimates that only 20 million are corporate and government users that are likely to remain around for the communications security RIM provides. The rest are consumers who jumps to compete phones, he believes. This business is worth about $ 2.75 million to a competitor, Walkley wrote in a research report Wednesday.

The other important component of RIM's value is its patent portfolio. The company had an early scare in the U.S. patent courts in 2006, when he was forced to pay $ 612.5 million for a small company founded by an inventor who had patents on wireless e-mail delivery. Since then, it will be presented for thousands of patents to use as a defense against future suits.

Patents in wireless technologies exploded in value last year, as Apple and Microsoft Corp. began to sue manufacturers of phones that run Google's Android software. Countersuits followed. A consortium that included Apple and RIM bought the patents from defunct Canadian maker of telecommunications gear, Nortel, for $ 4.5 billion last year. That compares with $ 1.13 billion Nortel's previously outstanding wireless business took in 2009.

As a counter move, Google has strengthened its own patent portfolio by buying Motorola Mobility Holdings Inc., a U.S. phone maker with only a little more than perspective RIM, for $ 12.5 billion.

Where that leaves RIM? Christopher Marlett, CEO of MDB Capital, said RIM's patents are worth more than $ 1 billion, and could be worth as much as $ 4 billion if it obeys war developed between Apple, Google, Microsoft and perhaps Samsung Electronics Co.

"It is a question as aggressive they get," Marlett said. His firm is an investment bank that focuses on intellectual property, including patents.

Walkley puts the value of RIM's portfolio at $ 2.5 billion, excluding the patents RIM bought from Nortel and share with Apple, Microsoft and other buyers.

RIM has a $ 2.1 billion in cash, but Walkley discounts this completely, because the phone business will probably start using up cash soon, and downsizing will require severance payments. This means the e-mail network, and the patents includes RIM's total value to $ 5.25 billion, for his affection.

This is very close to RIM current market capitalization, at $ 5.4 billion, but a buyer could expect to pay an award.

The cash cushion also means that RIM is in no immediate danger of going bankrupt. But as the stock decline, RIM is likely to face increasing pressure from shareholders to unlock the company's value through a sale, and leave the comeback plan.

A possible middle ground would be to sell the patent portfolio to save the rest of the company. Two months ago, AOL, once a pioneering Internet service provider, sold and licensed its patents, which are more modest than RIM's for $ 1 billion-to Microsoft.

Microsoft is a company which is suggested as a potential buyer RIM. The software Juggernaut tries to get back in smartphone software, but its Windows phones were not popular until now. Buy RIM could give it a chance to establish itself as a provider of trusted wireless email services, although moving subscribers from BlackBerry to Windows could not challenge.

Wednesday, May 30, 2012

What can save Blackberry-maker RIM

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