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RIM looking to sell NewBay

Research in Motion (RIM) became a leader in wireless innovation when it revolutionized the mobile industry with the introduction of the Blackberry in 1999. However, since that time, following the introduction of other competing products, its market share has declined, losing 95% of its share since 1999. So sever has been the effect, that it was reported recently that the company had started to liquidate assets, with its jet being sold in order to reduce the operating budget. So it probably won’t come as too much of a surprise to market analysts and tech geeks alike that rumors are now abound that the company, based in Waterloo, Ontario, Canada is looking to sell cloud services providers NewBay as well as a number of other recently acquired assets, all as part a strategic review process.

RIM acquired NewBay back in October 2011, reportedly for around $100m as it sought to roll out a new strategy to stem its steady decline. Clearly, they have since changed their mind that NewBay, a provider of photo, video and social networking tools for smart phones and computers would fit well with their recovery plan.

Back in October, analysts saw the acquisition of NewBay, based in Dublin, Ireland, as a significant part of the former RIM leadership’s plan to get back on course and use the boost of NewBay to deliver service revenue by having carriers utilize its service for messaging, content delivery, and analytics on all smart phones. Projections were based at the time of the purchase on NewBay’s 80million subscribers. NewBay stores media on its own servers and delivers to any internet-connected device, including mobile phones, personal computers, and tablets.

However, recently there had been mounting pressure on RIM executives, resulting in the resignation of their Co-Chief Executive Mike Lazaridis and Jim Balsillie. Already RIM’s new CEO Thorsten Heins has begun a strategic review process focusing on the delivery of a new line-up of devices running on RIM’s new BB10 operating system, all by the first quarter of 2013.

Forums have been busy with rumors of the impending sale, with Crackberry member, D March saying, “There are tons of cloud services to use. They don’t need to own one,” with another member, Darlaten commenting they were curious how security would measure up “I have to know that they have uncompromised security and quite frankly have security as their number one priority. At the moment, outside of RIM, I simply don’t trust anyone else’s security.”

Since seeing their share price fall more than 60% in the course of last year, RIM has continued to decline, with its market share dwindling to the likes of other market leaders such as Apple and Samsung. Since taking the reins early in 2012, in an attempt to stem the decline, Heins has retained RBC Capital Markets and JP Morgan to explore possible options available to RIM.

At the moment, RIM has declined to comment on the report of the NewBay sale.

On a positive note, RIM shares closed more than 6% higher at $8.29 on the Nasdaq on Friday and Bloomberg reported that tech giant International Business Machines Corp has considered buying RIM’s enterprise division.


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