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RIM Denies Rumors Of Possible Hardware, Messaging Division Split

June 25, 2012

Research in Motion (RIM), the company behind the BlackBerry and the PlayBook tablet computer, is denying published reports that officials there are considering splitting the business in two, separating the manufacturing division from its messaging network.

The story, which was first reported by the subscriber-only UK news website The Sunday Times, is that RIM was considering selling off its slumping mobile device hardware and either retain their data network or license it to a third-party, ZDNet‘s Zack Whittaker said.

“RIM, which last month said it had hired JP Morgan and RBC Capital to look at its strategic options, could break off its handset division into a separate listed company or sell it, the British newspaper reported without citing sources,” Reuters‘ Kylie MacLellan noted. “Potential buyers would include Amazon and Facebook, it reported, adding that RIM’s messaging network could also be sold, or opened up to rivals such as Apple and Google to generate income.”

On Monday, Iain Marlow, Technology Reporter with The Globe and Mail, reported that several people close to the company had dismissed the report as “a silly fantasy” and  “one of the most ridiculous ideas I have heard in a while.” In addition, Marlow reports that one former RIM executive has claimed that splitting the hardware and messaging operations “would accomplish nothing.”

“RIM spokesman Nick Manning, meanwhile, said the company’s top management remains committed to maximizing shareholder value by continuing on a turnaround strategy that will see RIM launch new devices in the coming months,” The Globe and Mail added. “Although the services side of the business is undeniably valuable, RIM’s hardware sales account for roughly 80 per cent of RIM’s revenue.”

According to the rumors, another possible option could see the company remaining intact, but selling off a sizable stake to a larger technology firm such as Microsoft, MacLellan and Steven Musil of CNET said. RIM declined Musil’s request for comment regarding specific parts of the Sunday Times report, but said that they were considering a number of different options going forward.

“RIM has hired advisers to help the company examine ways to leverage the BlackBerry platform through partnerships, licensing opportunities, and strategic business model alternatives,” a RIM representative told Musil. “As [CEO] Thorsten [Heins] said on the company’s fourth-quarter earnings call, ‘We believe the best way to drive value for our stakeholders is to execute on our plan to turn the company around.’ This remains true.”

“In a nutshell, RIM isn´t looking for an all-out buyout and would rather separate, split, and sell off sections as and when it needs to,” Whitaker said. “Splitting the company into two divisions could be dangerous for the other. Blackberry smartphones require the data network for email and browsing, while RIM´s data network is all but completely worthless without BlackBerry phones.”

An announcement regarding the company’s future could come later on this summer, ZDNet added.

Last week, RIM announced another round of employee layoffs, telling Eric Zeman of InformationWeek “that they had reduced some positions as part of its program and may continue to do so as the company methodically works through a review of the business.” They did not mention exactly how many workers would lose their jobs, but Zeman said that the company was in the middle of a restructuring process designed to help them cut costs by approximately $1 billion.


Source: redOrbit Staff & Wire Reports



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