It is being rumored that BlackBerry maker
Research In Motion Ltd.
(
RIMM
) is looking to split its messaging business unit from its
BlackBerry mobile developing unit.
Research In Motion has already selected
JP Morgan
(
JPM
) and RBC Capital to identify business strategies that could help
the BlackBerry handset business. The company is also considering
other options, including its disposition, spin-off or even merger
with a company that could provide technological support.
Continuous loss of market share and increasing competition from
Apple Inc.
's (
AAPL
) iPhones and
Google Inc.
's (
GOOG
) Android-based smartphones, coupled with poor handset sales
primarily due to a backdated operating system have dampened
investor's confidence.
So in order to minimize its losses as well as to retain
goodwill, Research In Motion is planning to separate its
loss-making wireless device manufacturing unit from its popular
BlackBerry messaging unit.
Our Take
We believe that Research In Motion started pondering the idea
last year when it launched the first QNX-based PlayBook tablet
without their popular BlackBerry messenger (BBM) and email service.
The move was highly criticized by the loyal BlackBerry customers
and consequently, RIMM launched an upgraded version of the PlayBook
tablet, fixing the email issue without the BBM application.
We also believe that the BBM application is not perfectly
compatible with the new QNX software and may have forced the
company to plan a separate entity or start from scratch, which
would require huge investments.
Despite receiving several takeover bids from major firms, the
company remains confident about improving its current business
scenario. The company has already launched an improved version of
the PlayBook tablet and plans to launch their popular BlackBerry
10-based smartphones, which is believed to be based on QNX-based
open platform. The company is also promoting software development
around its tablets and smartphones in order to compete with Android
phones and iPhones.
Currently, Research In Motion has a Zacks #3 Rank, implying a
short-term Hold rating on the stock.
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