BlackBerry maker Research in Motion (RIM) is reportedly planning to spin off its struggling handset manufacturing division, amid plummeting share prices.
According to a report in The Sunday Times, potential buyers for the handset business include Amazon and Facebook, which is rumoured to be developing its own smartphone.
RIM has hired two investment banks – JP Morgan and RBC Capital Markets – to review the company's various financial strategies, “including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives.”
The sale could fetch several billion dollars, according to activist investor Jaguar Financial, and would leave RIM with its popular BlackBerry Messenger (BBM) platform, which the company could either open up to network to rivals, such as Apple and Google, or sell.
“These are desperate times and they cannot afford to sit still,” Victor Alboini, head of Jaguar Financial, told the newspaper.
RIM in March reported a net loss of $125 million (£80m) in the fourth quarter of 2012, and a 25 percent year-over-year decline in revenue, to $4.2 billion. Although its number of users has grown over the last four years, its market share has dropped from 50% to 10%.
The company is this week expected to report a loss of more than $10 million (£6.4m) between March and May – the first time its operating figures have dropped into the red since 2003.
RIM has committed to achieving significant efficiencies and operating cost reductions over the course of this fiscal year, and has already started cutting jobs, as part of a global restructuring plan that will see at least 2,000 redundancies.
RIM said in a statement that it continued to believe the best way to drive shareholder value was to execute its turnaround plan, which is expected to be unveiled by the end of the summer. This could include keeping the company together but selling a stake to a larger technology company.
However, Ovum analyst Nick Dillon said that selling the handset business would mean the end of the company.
“The only reason to split it up would be to make it more attractive to buyers,” said Dillon. “Ideally they would like to carry on the business as it is, but times are getting tight and they have has to call in the banks. These are contingency plans – they're prudent at least to be taking these measures.”
About 9.7 million BlackBerry phones shipped in the first quarter this year, a decline from the 13.8 million units that shipped in the first quarter of 2011, according to IDC.