RIM selling BlackBerry handset business?

The former king of the smartphone world is reportedly looking to split its company in two, with the hardware arm headed one way and the software arm another.

By TheWeek.com Jun 26, 2012 2:34PM

Ailing BlackBerry manufacturer Research In Motion (RIMM) is looking to sell off its hardware business, according to a report from British newspaper The Sunday Times. Potential buyers for its phone division allegedly include Facebook (FB) and Amazon (AMZN). Meanwhile the Canadian company is renewing its focus on developing and licensing its proprietary messaging software -- such as BlackBerry Messenger and email -- to other companies. The Sunday Times report, however, doesn't cite any sources, although RIM's relatively new CEO Thorsten Hein once said that the firm was in need of "substantial change." 


Is RIM splitting in two?


The writing is on the wall: RIM recently hired JPMorgan and RBC Capital as business advisers, says Steven Musil at CNET. The company has "been struggling to bring back lost market share" now that Apple and Android rule the industry, and the most recent earnings report showed $125 million in losses for the fourth quarter. RIM said publicly that it's looking at "strategic business-model alternatives"; essentially, that's "corporate-speak" for exploring a potential sale. Don't be surprised.


A split would actually hurt both RIM divisions: In RIM's case, splitting the company into two divisions could be "dangerous" for the other, says Zach Whittaker at ZDNet: BlackBerry smartphones need the data network for email and browsing, while RIM's data network is "completely worthless" without BlackBerry phones to anchor it. Take a look at Palm, a now-defunct phone manufacturer RIM is often compared to. In the mid-2000s, Palm famously split its hardware division from its software arm. "If history is to be our guide, RIM could be facing a similar downfall." RIM may be better off selling itself to a single company like Microsoft.


RIM should sell its phone division . . . but only to Facebook: The company's hardware business is definitely troubled, says Sean Ludwig at VentureBeat. A sale to Facebook would make sense because the social network is already rumored to be building its own Facebook Phone. "RIM already has the infrastructure set up to build large quantities of phones, so it could be a smart investment" for Zuckerberg and crew. For RIM, that could be something to like.


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