RIM’s downward spiral continues

BlackBerry maker Research in Motion (RIM) is reportedly mulling over the possibility of splitting its struggling business into two distinct entities.

According to the Sunday Times, RIM could spin off its handset division to a corporation like Amazon or Facebook. Alternatively, the handset division could be transformed into a separately company. 

Essentially, this would allow RIM’s messaging network to be separated from its ailing handset business.  



However, Morgan Stanley analyst Ehud Gelblum believes RIM will have to do more than simply split its business into separate entities. Indeed, Gelblum estimates RIM will need to axe 90 percent of its 16,500 employees, leaving it with 2,000 workers and a niche position focused on high-security markets. 


“RIM is likely to significantly miss estimates in its FQ2’13 August quarter as it gets hit with the triple whammy of a quickly aging legacy portfolio of BB7 devices, the standard pause in unit shipments ahead of the launch of its new BB10 phone and the overall swoon in the smartphone market caused by the pause ahead of the anticipated October iPhone 5 launch,” Gelbum wrote in an industry note.

“Market share loss accelerates in FY14 as risks we have flagged earlier intensify, namely 1) competition increases in emerging markets due to increased availability and lower price points of Android smartphones and 2) BB10 misses back to school and the product flops, particularly because it has no keyboard which we believe is a key feature of Blackberries that is keeping the existing Blackberry faithful strong.”

It should be noted that Morgan Stanley recently downgraded RIM to underweight from equalweight, the equivalent of a hold rating.