RIM Considers Spinning Off Handset Business From Messaging

According to this Reuters report, RIM is considering separating its messaging network business from its manufacture of handsets, and either listing the resulting new company separately, or selling it to another firm. According to the article, "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. An alternative option would be to keep the company together but sell a stake to a larger technology firm such as Microsoft."

Comments

Handle has been pushed

[Anonymous Coward]

Water is swirling in the bowl

Re:Handle has been pushed

[goombah99]

And yet, unlike Nokia, they still are making a profit every quarter. Their stock may have fallen but its is in the oversold regime: price to earnings ration is just 4.4. While their predicted P/E does get worse but 15.44 is low for a tech company, and very low compared to facebook at 105. http://www.bing.com/finance?q=RIMM

Re:Handle has been pushed

[V-similitude]

You can't really value a shrinking company on the same scale as a growing company. There's no historical P/E that could convince me to buy a dying company. (There are other things that could, like price/book, or likelihood of a takeover, or a projected P/E of say 1, etc.)

Also, 15.44 proj P/E is only really slightly low. Quoting FB's absurdly high P/E (which is no longer 105) is just silly. Compare to Apple at 14.19 historical P/E, and still growing strongly. Or to Google at 17 historical P/E (and growing). 15.44 is low for a growing tech company, but not even that low, so it's hardly a reason to buy a shrinking company.

Catch-22

[mystikkman]

Open up Blackberry Messenger(very popular in parts of Canada, Europe and Asia) to iOS, Android and WP to generate some licensing/ad revenue but then lose exclusivity and sales of the BB10 and BB OS 6 devices as Messenger addicts no longer need to get a Blackberry to use it with their friends.

Re:Catch-22

[Anonymous Coward]

If your entire businiess model rests on having a closed off IM network in the year 2012, you may want to rethink things...

Re:Catch-22

[Voyager529]

If your entire businiess model rests on having a closed off IM network in the year 2012, you may want to rethink things...

In 2008, it would've been a perfect. They could have used their then-relevant market share as a springboard to have made BBM into *the* data-based messaging platform, making PingChat/WhatsApp/Kik/LiveProfile/eBuddy/iMessage/GoChat/ChatON all nonstarters...and they could have charged $1 a month for a BBM pin and *everyone* would have been on it.

The question is whether they could still do it, in 2012, for free.

Just go back to what you did best

[clickclickdrone]

Mobile corporate messaging par excellence. It's what made your name and it was world class. Since then you've just faffed about with every bandwagon going and totally missed your USP.

Re:Just go back to what you did best

[Anonymous Coward]

I imagine the impending death of a corporation occurs much as the death of a single person supposedly does.

1 You identify the initial threat.
      A) The board wakes up to find the stockholders are angry with a 3rd quarter's market valuation of their equity, and its clear that the analysts no longer responding to their PR.

2) You get the general feeling that something is terribly wrong.
      B) The top-level executives are made aware that if they can't come up with a credible action plan to counter the downward slide, changes will be forthcoming.

3) You get visceral confirmation from outside that you are in deep dog-doo. Other people's behavior around you changes, markedly.
      C) Your debt to equity ratio his double along with the cost of the commercial paper that used to fund your sales junkets and bonus parties.

4) Your life begins to, "flash before your eyes."
      D) Historical reports confirming the reality of your down-slide are trotted out and contingency plans are drawn up. (Grim faces exiting these heretofore convivial sessions are interpreted by staff as signs of doom.)

5) You begin to consort with God about alternatives and bargain with yourself about changes in the next life.
      E) Everyone knows there ass is on the line. Resumes are updated and posted to LinkedIn, you begin to renew old acquaintances. Let the Lay-offs begin.

6) The logical alternatives to past decisions are reanimated in the vain hope that they might still have value in future.
      F) RIM's executives publicly acknowledge that the goose has laid its last golden egg and its worth more to them as Christmas dinner and offal than as a single undervalued business entity. Smoke signals enter the ether regarding arbitrage.

7) Death, failing an act of God, is imminent.
      G) Capital equity firms like Bain Capital are 'consulted'.

Why would they think either approach would work?

[93 Escort Wagon]

If they'd seen the writing on the wall early on, selling access to their messaging network *might* have worked (although I don't really believe that). But at this point the market has spoken - and both sides of RIM's business are toast.

The people who think there's much demand for RIM's messaging network are living five years in the past.

Deck Chairs

[Sponge Bath]

If we move them about it appears like we are doing something useful. Iceberg? What iceberg?

I'm shocked, shocked I tell you

[PCM2]

So basically, RIM is now openly mulling every option we all floated months ago, back when they were still insisting there was no problem.

Remind me again why anyone should have faith in the management of this company?

El Reg may not be getting a bargain

[Kupfernigk]

So let me see: a Canadian company is speculated about by a Murdoch-owned newspaper in the UK with no evidence and no sources, this is referred to by Reuters, and you translate this as "RIM is now openly mulling...."

Remind me again why anybody should take your pronouncement seriously?

Netcraft Watch

[mchappee]

Has Netcraft confirmed anything about RIM yet? Just checking.

MC

Time to Become a Software Company

[SlashdotOgre]

I personally believe that the only way for RIM to survive is to pull a Sega, exit the hardware business, and become a software company. Their email software is the best mobile client I've ever used and in the time I've had five BB's, I've also had several Windows Mobile Std/Pro (Moto Q, Q9M, Samsung Saga), iOS (iPod Touch), and Android (HTC Eris, Thunderbolt) devices (but no Windows Phone 7) so I do have something to compare to. The only email client that I could comfortably manage 100+ emails a day is the BB. If they do go the software route, I would hope they strongly control which hardware they will run on so as to control the CX.

Re:Die RIM, Die

[hairyfeet]

Citation please? because i thought you could always declare bankruptcy, that in most cases it simply wasn't a sound business decision. for example the airlines still had operating capital and money coming in when they declared, they simply went for bankruptcy because it would allow them to dump the retirement benefits they promised the workers (in return for getting them to accept lower wages) on the American taxpayer and keep the money.

as for RIM, I hope they realize they might as well simply shut down the entire handset business if they do that, because it would be suicide. the only ones buying Blackberry phones anymore are those who buy it for the messaging, which I have been told by several has become popular with teens in several countries. Without that being exclusive to Blackberry those customers will simply buy iPhone or Galaxys and that will be the end of that.

Re:Die RIM, Die

[symbolset]

Sure you can. SCO did it. The lawyers will make sure that by the time it's done all the assets are gone and the creditors don't get paid.