This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

IBM Has Little Reason to Buy Research In Motion Unit

NEW YORK ( TheStreet) -- Rumors that IBM (IBM - Get Report) has expressed an interested in buying part of Research In Motion (RIMM) breathed life into the embattled handset maker's shares. But it makes little sense.

Citing two people familiar with the matter, Bloomberg reported that IBM made an informal approach about acquiring the division that operates a network of secure servers supporting BlackBerry users. The unit could be valued at $1.5 billion to $2.5 billion.

For RIM to carve off a crucial part of its business ahead of next year's much-delayed BlackBerry 10 launch would be a strange move. While the Canadian firm has struggled with delayed product launches and intense competition in recent years, BlackBerry security remains one of the company's biggest selling points.

"It would be like removing one of your most important organs -- enterprise services is very much entwined with the BlackBerry offering," said Ron Gruia, principal analyst at Frost & Sullivan. "RIM has waited this long, they may as well wait and see what happens with BlackBerry 10 phones next year."

CEO Thorsten Heins recently discussed the possibility of licensing the BlackBerry 10 platform to other manufacturers in an interview with the U.K.'s Telegraph newspaper. "You could think about us building a reference system, and then basically licensing that reference design, have others build the hardware around it -- either it's a BlackBerry or it's something else being built on the BlackBerry platform," he said. "We're investigating this and it's way too early to get into any details."

That raises the possibility of another company, say, handset giant Samsung, forging a licensing deal with RIM.

A licensing deal is a much more plausible outcome than IBM acquiring the firm's enterprise services business.

As for IBM, with $11.2 billion of cash on hand, Big Blue could easily afford RIM's enterprise services business. Nonetheless, it's not clear that the deal would make sense for the hardware and software giant.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
IBM $138.46 0.00%
AAPL $117.81 0.00%
FB $105.45 0.00%
GOOG $750.26 0.00%
TSLA $231.61 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs