Bloomberg News

RIM Gains on Speculation It May Explore Strategic Options

October 04, 2011

(Updates with Apple chief’s comments in fifth paragraph.)

Oct. 4 (Bloomberg) -- Research In Motion Ltd., maker of the BlackBerry smartphone, climbed amid speculation the company may have hired an investment bank to explore strategic options.

“It’s looking less and less likely that they can make the turnaround on their own,” said Tavis McCourt, an analyst at Morgan Keegan Inc. in Nashville, Tennessee, who rates RIM “market perform.” “So whether they’re hiring an investment bank to help defend themselves against activists or outright sell themselves or explore alternatives, those are the kinds of stories that make sense to investors.”

RIM has plunged 64 percent this year as the company lost ground to Apple and handset makers that use Google Inc.’s Android operating system. The Waterloo, Ontario-based BlackBerry maker’s share of the global smartphone market fell to 12 percent in the second quarter from 19 percent a year earlier, according to Gartner Inc.

RIM rose 50 cents, or 2.4 percent, to $21 at 4 p.m. New York time on the Nasdaq Stock Market. The stock had earlier gained as much as 9.7 percent before paring those gains after Apple announced a new version of its iPhone.

Apple Chief Executive Officer Tim Cook unveiled its iPhone 4S, with a chip seven times faster than the current model. Cook said that 92 percent of Fortune 500 companies are using or testing Apple’s iPad, which outshipped RIM’s BlackBerry PlayBook tablet computer 46 to 1 last quarter. Ninety-three percent of those companies are testing the iPhone, he also said.

New QNX Phone

Last week, RIM climbed on speculation that billionaire Carl Icahn may take a stake in the company. Icahn, a veteran corporate raider, had pushed for a board seat at handset maker Motorola Inc. and pressured the company to split in two, which it did in January. In August, Motorola Mobility Holdings Inc., the business that makes mobile phones, agreed to sell itself to Google for $12.5 billion.

RIM spokeswoman Tenille Kennedy declined to comment.

Co-chief Executive Officers Mike Lazaridis and Jim Balsillie said last month a sales recovery is imminent, citing the “excellent reception” that a new range of BlackBerry 7 phones have received. The company is also counting on a new phone in 2012 based on its QNX operating system winning over more customers than the PlayBook.

RIM shipped 200,000 of the QNX-based PlayBooks last quarter, down from 500,000 in the previous period when they first went on sale. That bodes badly for RIM’s turnaround and means RIM is destined at some point to recruit a bank to consider strategic changes, said Mike Genovese, an analyst at MKM Partners.

“They’ve already weakened QNX by putting out a PlayBook that nobody wanted,” said Genovese, who rates RIM “neutral.” “If they haven’t done it yet, they will eventually hire investment bankers to explore alternatives as there’s a certain inevitability to this story.”

--Editors: Peter Elstrom, Ville Heiskanen

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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