RIM Dismisses Company Split Report

Michelle Maisto,

BlackBerry maker RIM has denied a report it is considering splitting its hardware and services businesses

BlackBerry-maker Research In Motion has reacted quickly to a report in the Sunday Times that it is considering separating its services business from its handset business.

The company has dismissed the report.

Silly Fantasy

Amazon and Facebook are said to be potential buyers, with Apple and Google possibly eyeing RIM’s successful messaging service, were it up for grabs.

However, Canada’s Globe and Mail quoted unnamed people “close to RIM,” who called the report “a silly fantasy” and “one of the most ridiculous ideas I have heard in a while.”

The Globe also quoted two former RIM executives who said top managers at RIM don’t take the idea seriously and that “splitting the two would accomplish nothing.” Former RIM co-CEO Mike Lazaridis, it added, agrees the strategy wouldn’t work.

For years, RIM executives have been holding out for the next big, nearly there release that would surely save them. In a July 2011 research note, RBC Capital analyst Mike Abramsky defended the idea of such a split, saying that that QNX – the software RIM was waiting for at the time, now-renamed BlackBerry 10 – was “not a panacea.”

Abramsky went on to write:

Despite the steps of QNX, Playbook, BlackBerry 7, new devices, etc., the handset organisation may still be moving too slowly and too conservatively; RIM has strengths in device, network and hardware engineering, but the market has shifted from hardware to software, from network needs to the consumer experience. RIM needs to “up its game” by promoting and/or recruiting new blood with competencies around software, consumer user experience, developer tools and relations, and marketing, and raising operational standards for accelerating product cycles and scaling operations. We believe the split may accelerate organisational change and help reinvigorate RIM’s culture and promote new blood, given that the current organization has missed (and dismissed) key disruptive changes in the market …

RIM Turnaround

RIM has indeed since promoted new blood and mixed things up.

In January, it announced little-known COO Thorsten Heins would take over for co-CEOs Lazaridis and Mike Balsillie. Heins, who at the BlackBerry World 2012 event in Orlando in February told reporters that there was a new excitement at RIM and employee morale was high, has undone other executive redundancies and trimmed down RIM staff considerably – reports of layoffs range from 2,000 to 6,000 – in a effort to save money and make RIM the “lean and mean” company it needs to be.

“RIM has a little fat on the hips,” Heins told reporters.

In May, RIM – with US sales nose-diving and BlackBerry 10 still months away, hired JP Morgan Chase and RBC Capital Markets to help it consider its options.

Responding to the reports of a possible split, a RIM spokesperson told eWEEK:

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.

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