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June 25, 2012

BlackBerry-maker may be split in two [updated]

RIM is looking at desperate survival options ahead of its quarterly results, including the splitting up of the company.

By Allan Swann

Research in Motion’s CEO Thorsten Heins may now be looking at splitting the Ontario company in two, with an eye to selling off its troubled handset division, according to a report by the Sunday Times.

The email and messaging division will then pursue its own buyer separately, suggesting the company is in dire straits in its attempt to stay relevant in the market it once led.

A statement from a RIM spokesperson did not deny the story, simply stating:

"RIM has hired advisers to help the Company examine ways to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives. As Thorsten 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."

RIM once held more than half of the world’s largest smartphone market, but has struggled in the face of Apple and Google’s touch screen smartphones, now accounting for less than 10%. Most dramatically, launched its own Playbook tablet which flopped, even after aggressive price cutting. RIMs new generation of devices under BlackBerry 10, a new OS and designed to compete with the latest devices from competitors, has been stuck in a quagmire with release dates constantly pushed back over the course of the last year to Q4 2012.

Even recent demonstrations have been running on alpha dev kits only. It still looks nowhere near completion, and RIMs current BlackBerry 7 devices – while remaining strong in developing nations – have struggled elsewhere. They have developed a strong market amongst youth in the UK, but this too is dissolving rapidly. It still holdsseveral key government contracts around the world.

The company’s share value has fallen from C$148 in 2008, to just C$9.50 at the time of print. Heins pushed out long term leaders Jim Balsillie and Mike Lazaridis at the beginning of the year, and replaced much of the executive team. Heins has embarked on an aggressive round of cost cutting, and it is understood that he has been shopping the company around to bidders as varied as Amazon, Microsoft and Google.

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The company is due to release its first quarter results on Thursday, and like Nokia’s recent announcements, the numbers will not be pretty. The company is expected to go into the red for the first time, alongside drained cash reserves.


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