RIM Board Under Pressure to Split Company or Partner With Microsoft

The future of BlackBerry-maker Research In Motion Ltd hangs in the balance after another round of shocking results raised the possibility of a tie-up with Microsoft.

After the completely terrible quarter and the delay of BlackBerry 10 devices, it's only natural that the previous rumors we've heard about RIM looking to spin off a division of the company or even partnering with Microsoft would bubble up again. Photo: Tim Lee/Flickr

Reuters reports that RIM’s board is under mounting pressure to consider unpalatable options such as selling its network business or forming an alliance with Microsoft Corp after the Blackberry maker again delayed the release of its next-generation smartphones, citing sources familiar with the situation.

The company again delayed handsets based on its upcoming BlackBerry 10 operating system, saying that the launch of BlackBerry 10 mobile devices has been postponed to early 2013 – more than a year later than initially promised.

“Over the past several weeks, RIM’s software development teams have made major progress in the development of key features for the BlackBerry 10 platform,” said Thorsten Heins, RIM CEO.

“However, the integration of these features and the associated large volume of code into the platform has proven to be more time consuming than anticipated,” he said, according to PC Pro.

Shares in the company plunged 18 percent in extended trading, slashing its market value to $4.1 billion. The stock has fallen about 70 percent in the past year.

One of the options is for RIM to abandon its own operating system and adopt Microsoft’s upcoming Windows 8.

According to anonimous sources, Microsoft CEO Steve Ballmer had approached RIM in recent months, looking to strike a partnership similar to the one the software giant has with Nokia.

RIM could also look for Microsoft to buy a stake in the company and fund marketing and other expenses. However, that would mean the end of the Canadian company’s technology independence.

The Research In Motion board prefers to see through the efforts to develop the new BlackBerry 10 operating system, sources told Reuters.

Microsoft could also be interested in RIM’s wireless patents. Both RIM and Microsoft declined to comment.

Research In Motion’s announcement that the company would slash 5,000 jobs, or 30% of its workforce, only reinforced the impression of a company that could be in terminal decline.

“It’s like watching a puppy die. It’s terrible,” said analyst Matthew Thornton of Avian Securities in Boston.

One more option for RIM could be to sell its proprietary network to a private equity firm or a technology company.

The buyer could then open up the company’s network operating centers to other smartphone providers, allowing them to also provide highly secured emails and other services to companies and government agencies.

BlackBerry-maker has in the past considered opening up its network to rivals, under a plan led by former co-CEO Jim Balsillie.

The opening-up could offer RIM a way forward as demand for its BlackBerry phones faces fierce competition from Apple Inc’s iPhone and Google Inc’s Android phones.

The idea would be to clearly define the network as an asset that could exist without BlackBerry handsets – an operational precursor that could have led to a possible legal split if the handset business ultimately proved untenable.

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,” said Eric Jackson, a hedge fund manager at Ironfire Capital in Toronto.

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