Report: RIM may break itself apart, with Amazon or Facebook picking up some of the pieces

BlackBerry Bold

The on-again, off-again rumors swirling around Research in Motion are back on following a report by The Sunday Times that the BlackBerry maker is considering a plan to split itself in two, possibly selling off its handset business to Amazon.com or Facebook. The report also suggests that another option for the struggling Canadian company would be to sell a stake to a larger technology company such as Microsoft.

After rumors arose earlier this year about Microsoft’s possible interest in RIM, GeekWire’s Todd Bishop downplayed the possibility of an outright acquisition.

“While RIM’s patent portfolio might be of interest to the company, the notion of Microsoft buying another mobile operating system vendor with a separate ecosystem of handsets is more than a little crazy,” he wrote.

Amazon also has been discussed as a potential buyer of RIM, a move that could bolster  its efforts as it pushes deeper into the mobile phone arena. Facebook also has been rumored to be working on its own phone.

It’s no secret that RIM is on the auction block. Last month, the company hired investment bankers to look at “strategic business model alternatives.”

RIM's stock has taken a beating over the past year

If RIM were to sell off its handset business or spin it off, it would be left with its messaging business.

Meanwhile, Morgan Stanley today downgraded RIM’s stock, saying that the company is experiencing “rapidly deteriorating fundamentals.”

“The only way RIM remains a viable entity is at a fraction of its current size, a transformation that erases much of its earnings power,” Morgan Stanley’s Ehud Gelblum wrote, according to a report by Bloomberg BusinessWeek.

Shares of RIM are down six percent in trading today. The stock is down 67 percent over the past year, and RIM now shows a market value of $4.85 billion.

As a full entity, that would still be a big chunk for any company to take on. Facebook’s largest acquisition to date is its $1 billion purchase of Instagram, while Amazon.com’s biggest to date is the nearly $900 million purchase of Zappos.

  • Guest

    We would recommend that Amazon and Facebook invest their monies in companies that make mobile phones that people actually want — Samsung and Apple, to name two possible investment targets.

    Amazon and Facebook: buy Apple. Not all of it, because it is too expensive, but a piece.

    • guest

      Amazon or FB would be buying RIM in an attempt to control their future instead of ceding it to Apple or Samsung. Being a minority shareholder in either of the latter doesn’t buy them that chance.

      • Guest

        But it does buy them loads of money, as Microsoft received when its early investment in Facebook decapled on IPO day. Wouldn’t you like a tenfold ROI?

        • Guest

          I bought APPL right after I bought my first iBook in 2001 and sold when it passed tenfold. To go up tenfold from today would value the company at $5.3T… Buy Apple? You go by Apple today and let us know how you do.

        • guest

          The MB/FB deal was primiarily about continuing/expanding the existing advertising parnership. The equity stake was incidental to that. Even MS didn’t confirm the corresponding FB valuation at the time; they just let FB tout it in order to secure additional and larger investors (which succeeded). Yes, it subsequently paid off on the equity side as well. Probably nobody was more surprised about that than MS. Again, doing deals for stock gain is not what operating companies do. If their shareholders wanted to invest in Apple or Samsung instead, they’d do so.

  • TomJTaylor
  • guest

    Well, MS is down more than the market. So looks like someone believes MS will be buying something. Or maybe it’s just their confidence in Ballmer being expressed.

  • http://twitter.com/khanklatt Khan Klatt

    After seeing Microsoft enter the tablet fray (Scene: A Redmond conference room a year ago: “If we cede the tablet battle against Apple to our hardware partners, we’ll lose the war; that’s why we need to green-light Surface”), is the handset fray really that different? With XBox and Surface, perhaps Microsoft is finally realizing that Steve Jobs (via Alan Kay) was right: “People who are really serious about software should make their own hardware.”

  • http://www.christopherbudd.com Christopher Budd

    I think the key and interesting part in this isn’t the handset business (which I think the consensus is that it’s a nearly lost cause) but the infrastructure side of things.

    RIM has a lot going for it in terms of security and while some of that is tied to the handset, that’s a part of the business that could potentially be retooled to integrate with commodity handsets.

    So, maybe it’s not Amazon or Microsoft but instead is AT&T or Verizon that buys up that part of them?