Friday, June 29, 2012

With BB10 delayed yet again, RIM weighs options: Microsoft deal, selling network business

Three anonymous sources "familiar with the situation" say that Research in Motion's (RIM) Board of Directors is under "mounting pressure" to consider options that the company would never think of - except for things like its horrible fiscal Q1 2013 results and another delay of its BlackBerry 10 smartphones.

These options include selling its network business (something that was rumored earlier this week) or forming an partnership with Microsoft.

RIM's shares were down nearly 18 percent, to $7.51 at noon, ET on Friday, June 29, the day after it reported its results.

If the company were to consider a partnership with Microsoft, it would do so by abandoning its own operating system and using Microsoft's upcoming Windows Phone platform.

Although Microsoft already has such a partnership in place with Finland's Nokia, a second deal is not out of the realm of possibility. The sources said that Microsoft CEO Steve Ballmer has approached RIM in recent months, inquiring about a similar alliance.

The sources added that Microsoft might buy a stake in RIM, or offer other financial "aid" to fund marketing and other expenses, if such a deal were to be made.

However, RIM has always wanted to go on its own. The fact that it owns the entire device - both hardware and software - has been an advantage for the company, much as it has been for Apple and its iPhone. Total ownership means more stability and easier ROM upgrades (witness Android fragmentation for the opposite end of the spectrum).

However, this option is not attractive to RIM because it would mean the end of the Waterloo, Ontario-based company's technology independence, they said.

A second option would be for RIM to sell its proprietary network to a private equity firm or some other tech company. The buyer could then license RIM's network operating centers and its technology to other smartphone providers. In that situation, one could see Microsoft, Google, and Apple all jockeying for an entry in the "BlackBerry" race.

It could even mean that other smartphone makers could finally have access to the secure and proprietary BlackBerry Messenger, still one if the company's big selling points.

It could certainly be lucrative for RIM, but it could also sound the death knell for BlackBerry devices.

This is a plan that co-CEO Jim Blasille was working on prior to his ouster. It was something the Board was definitely not in favor of, then. Still, Eric Jackson, a hedge fund manager at Ironfire Capital in Toronto said it simply: "[RIM is] going to have to be much more open minded to the idea that Jim Balsillie was working on before he was ousted of opening their network to third parties."

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