RIM sells off NewBay for $55.5 million

By Adam Zeis on 27 Dec 2012 04:26 pm

Rumors were floating around as far back as August that RIM was looking to unload NewBay, the digital content company they acquired back in October of last year. Today, Synchronoss Technologies, a company that provides mobile content management solutions for connected devices, announced that they have snagged up the RIM subsidiary for the sum of $55.5 million in cash, about half of the $100 million RIM originally paid for NewBay. Of course this doesn't mean RIM is out of the cloud storage game, just that they have other solutions in mind -- so don't worry too much. Read on for the full press release and hit up the forums for more discussion.

Discuss more in the forums

Synchronoss Technologies Announces Acquisition of NewBay

BRIDGEWATER, N.J.--(BUSINESS WIRE)--Synchronoss Technologies, Inc. (NASDAQ: SNCR), the mobile innovation company that provides activation and mobile content management solutions for connected devices, today announced that it has acquired NewBay, a wholly owned subsidiary of Research in Motion Limited. NewBay is a leader in cloud services, enabling mobile operators and service providers to deliver content experiences across connected devices such as smartphones, tablets, PC's and TV's. NewBay's cloud services are delivered to millions of user and stores billions of media files for live operator services around the world.

In consideration for the acquisition, Synchronoss paid $55.5 million in cash to Research in Motion Limited, and there was no assumption of cash or debt. The transaction closed at the end of the fourth quarter of 2012.

"By adding NewBay's technology assets and millions of subscribers, this transaction further establishes Synchronoss as the clear leader in providing cloud based mobile content services for mobile operators around the world. By combining our strengths, Synchronoss will deliver the most comprehensive, scalable and secure cloud platform, and we will significantly expand our early market share leadership position," said Stephen G. Waldis, Chief Executive Officer of Synchronoss.

Waldis added, "We are excited to bolster our international presence through the acquisition of NewBay, including a major European mobile operator in the early stages of a significant planned expansion. Additionally, we welcome other international customers that will be new to Synchronoss. We believe that the combination of NewBay and Synchronoss will further ensure the success of the significant cloud services launch being prepared at Verizon Wireless, which remains on schedule."

NewBay provides an open, white label software platform that powers cloud-based services for storing, sharing, accessing and organizing digital content across any Internet connected device. The company's technology platform empowers customers to deliver user content services such as social networking, digital vault, photo and video albums, network address book, notification and converged messaging services. Synchronoss' mobile content cloud platform will be able to leverage many capabilities developed by NewBay, including those related to illicit content protection, legal intercept, copyright, antivirus and transcoding among others. In addition, joint customers will benefit from Synchronoss' proven track record of taking best-of-breed technologies and scaling them to the highest levels demanded by Tier 1 carriers in order to deliver a world class customer experience.

NewBay's European customers include a group level implementation at Vodafone Group, in addition to Orange, Swisscom, T-Mobile; U.S. customers include AT&T, T-Mobile, Verizon and US Cellular; and AsiaPac customers include LG Electronics and Telstra.

Synchronoss expects the acquisition will be neutral to slightly accretive, on a non-GAAP basis, to its full year 2013 financial results. Non-GAAP results exclude stock-based compensation expense, amortization of intangibles associated with acquisitions, non-recurring professional fees associated with closing acquisitions and the purchase accounting reduction to deferred revenue associated with acquired companies. Additionally, for GAAP purposes, Synchronoss expects to incur a restructuring charge in the first quarter of 2013 related to the acquisition of NewBay.

The company will provide additional financial details related to the NewBay acquisition on its fourth quarter 2012 financial results conference call, which is expected to occur in early February. At this time, the company will also provide revenue and profitability expectations, including contribution from NewBay, for both the first quarter and full year 2013. Additionally, Synchronoss plans to host its first analyst and investor day at the company's headquarters in New Jersey during mid-February. Details for both the fourth quarter financial results conference call and analyst and investor day will be issued in subsequent press releases.

Topics: NewBay News & Rumors

Adam Zeis 3038 (articles) 2792 (forum posts)

39 comments

BB_Bmore Dec 27, 2012 at 4:51 pm

 10  10 that is all.

martinjdub Dec 27, 2012 at 5:04 pm

Married and divorced faster than I was ;)

Bobert_123 Dec 27, 2012 at 5:09 pm

is this is bad?

imcurved Dec 27, 2012 at 5:21 pm

Not necessarily if RIM extracted what they need and sold the rest of what they don't need then it's actually good. The selling may help to scale down the overhead.

TMO_9000_32GB_PB

Thunderbuck Dec 27, 2012 at 6:00 pm

No. Just means RIM has likely found a strategy that doesn't require them.

The impression I get about NewBay was it was intended to provide cloud services similar to iCloud. I don't know how much that actually matters to customers, and when you factor in stuff like 7Digital and Rovi track all your music and video purchases, and that Dropbox will be "deeply integrated" into BB10, it's questionable that RIM would really need to operate its own facilities.

jbrandonf Dec 28, 2012 at 1:09 pm

Dropbox doesn't create 'lock-in' that iCloud does. Its about creating so much convenience that people don't want to leave. They store all their photos/videos, contacts, calendars, backups, and their mail in iCloud. When they find out it doesn't integrate into other phones or helps influences the buyers decision away from other platforms.

I bought a One X from HTC earlier this year and with it came a promotion for 25gb of storage free for 2 years. It ended up with little impact on my decision to migrate over to a Lumia 920 because I saw that there were apps I could use to view the data I had stored there.

Blackberry needs an integrated (exclusive) solution for their phones. Apple has iCloud, Microsoft has Skydrive, Android has Google Drive.

416to604 Dec 28, 2012 at 2:59 pm

The only exclusive solution you mentioned is iCloud... and i think in this case exclusivity isn't the best option. i would like to be able to access my cloud files on whichever device i choose to use (BB10, PC, WP8, Android etc.). right now there is a dropbox client for virtually every platform so that seems to be the best option.

Bold 9900 - Playbook 32GB

jbrandonf Dec 28, 2012 at 11:02 pm

I agree with you, but it does nothing for RIM.

just_luc Dec 27, 2012 at 6:04 pm

There was likely something newbay had that RIM wanted, they bought it.. took what they wanted, and got rid of the scrap.. as long as what they took was worth the 50 million they spent then it seems like good business. Why hang on to a company with nothing left to offer? Sure they could have "absorbed it" like they do many other companies, but why when then can make 50 million selling off the carcase?

BruvvaPete2 Dec 27, 2012 at 6:19 pm

Cannibalising then getting rid of the carcass is the only good thing I can think of regarding this "deal". At least they now have more cash on hand to help with that giant ad campaign RIM will need (Superbowl ads.. Maybe?) come Jan/Feb 2013.

randall2580 Dec 27, 2012 at 6:31 pm

RIM purchased New Bay in October and by August wanted to be done with them. In the world of acquisitions, the two teams barely had time to get to know each other.

I agree with Thunderbuck that they have solutions that don't include the extra expense of running another division - remembering they are trying to reduce costs and staffing. It appears that new managers did not share the vision for this acquisition that the old managers had.

mathking606 Dec 27, 2012 at 6:28 pm

I'm really sad about this. I know that they might have found other ways to do it but nothing will beat having a native cloud. If you look at all the other mobile OS's every single one has a native cloud solution ex Microsoft's Skydrive and Apples ICloud. Yes I know that they are integrating box and dropbox but there is only so much they can do with that. With NewBay they could have allowed you to sync documents from Docs to Go to the cloud ad be able to edit them within the cloud and many more things. Well I guess I'll have to just wait and see on January 30th.

BBPandy Dec 27, 2012 at 6:41 pm

Those are my thoughts too

travaz Dec 27, 2012 at 9:34 pm

RIM may have figured out a way to keep it native using the NOC. I think they have another solution

Mikhou Dec 27, 2012 at 6:45 pm

Having to Sell asset to Pawnshop to be able pay grocery and Current Bills is Good ?

sk8er_tor Dec 27, 2012 at 7:10 pm

Who said they sold it in order to pay bills? Cash increased to almost $3 billion in the latest quarter.

diegonei Dec 27, 2012 at 10:06 pm

Don't feel the troll. :)

Graheem Dec 28, 2012 at 12:57 pm

You don't appear to know the financial position of RIM.

SDTRMG Dec 27, 2012 at 6:54 pm

Now I'm having "mobile cloud storage" thoughts. What will be there? iCloud, Dropbox, sky drive solution? Will it be box? Did they work out a deal with the new NewBay owners. Will we have a on par cloud storage and sync as other mobile platforms. I use blackberry and an iPhone 5 and would love to just carry one bb10 device, and I'm ire I will either way. But to totally give up iOS these have to be there and on par.

greatwiseone Dec 27, 2012 at 7:04 pm

When RIM bought Newbay back in 2011, it felt like a bit like a panic purchase because RIM needed some sort of cloud strategy for BB10. Thor probably decided that it wasn't worth RIM's time and money to do something like this (and went with deeper integration with Box and Dropbox instead).

formerwebosfan Dec 27, 2012 at 7:25 pm

At least they didn't do like HP did and pay 1.2B and then go open source with it.

Poodwahr Dec 27, 2012 at 7:40 pm

Nice investment.

k_a_s_m_i_t_h Dec 27, 2012 at 8:17 pm

I was hoping they would offer some sort of integrated cloud storage for BB10 customers. I know they are working with box, etc. But as an enterprise customer, a for BlackBerry, by BlackBerry running through there NOC with encryption and compression would have been a great feature to offer to the enterprise. I really don't want to rely on box or dropboxfor cloud storage, I remember not long ago when dropbox did an "upgrade" and for several hours all dropbox accounts could be logged into without providing a password. This is not acceptable for an enterprise.

ferre_kun Dec 27, 2012 at 8:40 pm

+1. I wish one day RIM can provide it's own cloud storage for us, both personal&corporate users. Maybe later after they done with bb10 preparations. I am willing to pay if they provide it. I stopped paying for any online storage when megaupload was shut down lol.

formerwebosfan Dec 27, 2012 at 8:37 pm

I'm waiting for HP to start up a investment company so that all of us can be as profitable as they are.

Seriously though, RIM really seems to understand what it needs to do to get back on track. If this sale is what management thinks is needed to better RIM's position then I'm all for it.
I believe that they are going to surprise more than a few people with how powerful and polished BB10 is. To me the Z10, even though it might not have the best styling, will be good enough to open a lot of eyes.

SuperionMaximus Dec 27, 2012 at 8:47 pm

That was a poor investment. A bit manic. I hope RIM does have some native cloud solution to rival the other platforms because it will be a weakness if BlackBerry 10 does not have cloud storage solution.

Frank2029 Dec 27, 2012 at 9:24 pm

+1 They could of done this in-house for far less money. Storage is dirt cheap now a days and it would cost what? no more then a high 6 figure salary to program for it.

midnightrambler108 Dec 27, 2012 at 10:15 pm

Maybe RIM intends on using some solution provided by NewBay itself. There is nothing that says they can't sell the company then have them make products for BlackBerry.