Split the Berry: Analyst says RIM should break into two

Split the Berry: Analyst says RIM should break into two - The Globe and Mail

Analyst proposes RIM split
As shareholders of Research In Motion Ltd. (RIM-T27.550.351.29%) prepare to meet tonight in its home base of Waterloo, Ont., an analyst at RBC Dominion Securities has some food for thought: Split the BlackBerry maker in two.
"RIM�s organization, like its handsets, needs modernization," Mike Abramsky said today in a research report titled "Split the Berry.

"By acting now, splitting RIM into network and handset businesses may target opportunities and unlock significant shareholder value."

Citing the pressure from Apple Inc. (AAPL-Q353.92-0.09-0.02%), maker of the iPhone, and Google Inc. (GOOG-Q533.516.231.18%), whose Android system has been gaining market share, Mr. Abramsky said the BlackBerry maker's valuation in the market "reflects low sentiment regarding RIM's turnaround prospects."

But he stressed the "intrinsic value" of RIM's core "crackberry" at its 68-million loyal subscribers around the world.

"Splitting RIM�s two distinct businesses � the BlackBerry and RIM Smart Devices � may allow each to more quickly expand and innovate, would separate each business from different market forces, and could make each more attractive to potential acquirers," Mr. Abramsky said.

"We estimate that breaking up RIM may equate to $50-56 a share in value, based on the service business valued at $37-40 a share and RIM�s handset business at $13-16 a share ... With the shift to the post-PC world, RIM�s two business � the service and handsets � increasingly operate within two different market structures with different market forces. "

It may work, then each company can focus on one direction.

So take the smallest player and make them 2 smaller players reducing their buying power to maintain margins...

Yup makes a lot of good sense to me!

Posted from my CrackBerry at wapforums.crackberry.com

RIM put them in this place by allowing the Droids and IPhones to be used
on their back end systems. (Enterprise)

If RIM actually does allow non-BB phones to be used with BES then this would
be the next logical step.

I think RIM has cut their own throat if they allow non-BB phones to work with BES.
This move will bastardize their phone line in the business world making it less attractive or needed.

Tim

Originally Posted by deRusett

So take the smallest player and make them 2 smaller players reducing their buying power to maintain margins...

Yup makes a lot of good sense to me!

Posted from my CrackBerry at wapforums.crackberry.com

If you think about it, the split they're talking about would create separate and distinct businesses with different buying needs; I'd question how much he buying power of each would be affected. I'm thinking that there isn't a whole lot of overlap of suppliers between the network and handset businesses (though I could be wrong). One is service-oriented, and the other is hardware/retail. Sure they'd be two smaller businesses, but given the divergent areas of focus, would their buying power be that much different than it is today? I'm not saying that such a split is or isn't necessarily the right move - haven't really had time to digest it yet. But at first glance, it does make some sense.

Posted from my CrackBerry at wapforums.crackberry.com

If anything I think it's be better to create two divisions within the company; corporate and personal. That way each division can focus on bringing what matters most to that segment to market while leveraging cost efficiencies assosicated with being a larger company (i.e. sharing the same OS, manufacturing facilities, etc).

Originally Posted by 18to7fiddy

If you think about it, the split they're talking about would create separate and distinct businesses with different buying needs; I'd question how much he buying power of each would be affected. I'm thinking that there isn't a whole lot of overlap of suppliers between the network and handset businesses (though I could be wrong). One is service-oriented, and the other is hardware/retail. Sure they'd be two smaller businesses, but given the divergent areas of focus, would their buying power be that much different than it is today? I'm not saying that such a split is or isn't necessarily the right move - haven't really had time to digest it yet. But at first glance, it does make some sense.


Posted from my CrackBerry at wapforums.crackberry.com

You'd be taking the highmargin software/service division out of the lower margin hardware manufacturing division,

You'd increase overhead with additional clerical staff for each company, again reducing the OM of each company.

They would be better IMO to restructure management, than to split such a small company in terms of global technology leaders into 2 smaller company's

Posted from my CrackBerry at wapforums.crackberry.com

Its a stupid idea. Almost as stupid as Palm splitting its OS from its hardware business.

(scarcasim) Wow this is a great idea. While they are at it they should create a REIT and lease the land back to the divisions to un lock the value of the land. Similar to what someone proposed to Target a few years back.(scarcasim)

Don't know who orginated the idea for the story but the intentions are pretty clear. They want RIM to split up so someone can pick up there server side only. The companies and organizations that use those servers are basically a money printing machine. Guess its a slow news day b/c this stuff is ludicris.

These ANALysts are nothing but a blight. I think they should do something useful like work at McDonald's.

Posted from my CrackBerry at wapforums.crackberry.com

You know what? For all the doom and gloom and public demand for change. I'm glad RIM has stayed the course. The two CEO's through public mumbling and terrible communication have continued to do one thing right and that's continue to draw some VERY key pieces that can be part of a new CHANGE for RIM. Of course no one will give them credit until there are tangible results, it's a race against time where the industry has convinced us that we need everything now.

Wasn't Palm advised to this exact same thing by some analyst way back when? There was the Palm OS and Palm devices. Palm OS licensed the OS to everyone and his donkey and Palm devices lagged on hardware research as they turned out to be the smallest player. Look what happened to Palm, passed around like a bad apple from one company to another and now the company doesn't even resemble what it was.
Wonderful advice these armchair analysts give to "unlock shareholder value", read "more money in my pocket by speculating on someone else's hardwork and destroying what the built so I can pocket a few extra $$$ at Wall Street"
These analysts should be told to build something on their own and then they should be told to split it in tiny pieces to unlock shareholder value. Good for nothing gamblers...

Originally Posted by ADGrant

Its a stupid idea. Almost as stupid as Palm splitting its OS from its hardware business.

Very true. I kinda forgot about that. Although this wouldn't be exactly the same - BB OS and hardware would still remain under one roof. It would depend on whether or not they have any intentions of opening up BES to other devices. Then too, I have my doubts about how well BB phones would stand on their own.

Posted from my CrackBerry at wapforums.crackberry.com

That is ridiculous. The service is tied to the handset. They need to be developed together. Didn't Palm do this with Palmsource a while back? Did wonders for them didn't it? They need to definitely do some restructuring and get rid of dead weight, but I don't see any value in splitting the company in two.

Originally Posted by 18to7fiddy

Very true. I kinda forgot about that. Although this wouldn't be exactly the same - BB OS and hardware would still remain under one roof. It would depend on whether or not they have any intentions of opening up BES to other devices. Then too, I have my doubts about how well BB phones would stand on their own.

Posted from my CrackBerry at wapforums.crackberry.com

BB OS is deeply integrated into the BES/BIS infrastucture (or is it the other way round). It's Blackberry's greatest strength and biggest weakness.

Splitting the company in two is about the stupidest thing I've heard all day. And I've met a lot of really stupid people already today.

It always goes this way, at the time of transition when the incite into the company is nil (for good reasons most times) people start to panic. Mike from RBC was one of the last to downgrade RIM. He missed the downside in the stock that has been created by the said lack of incite into the transition. Now he thinks RIM needs to be broken up. OK whatever. RIM needs to get the 7.0 phones out the door. Carry on getting new and productive products to market. Once the transition is complete the speed at witch they can do just that will increase!

So where would QNX be? On the network side or the phone side. Or would they split QNX up also?

Or would the core company (ie RIM) sell finished QNX software to the phone side (ie Blackberry)?

We'll find out in about an hour or so :)

Originally Posted by flyersfan76

So where would QNX be? On the network side or the phone side. Or would they split QNX up also?

Or would the core company (ie RIM) sell finished QNX software to the phone side (ie Blackberry)?

Phone of course. However this dumb idea will be ignored.

Originally Posted by ADGrant

Phone of course. However this dumb idea will be ignored.

But why. QNX on Phone and Tablet is the smallest part of their market. At least now it is and why would they want to loose market share in their core market to new competitors to the market like Microsoft. Ford Sync is not as good as people make it out to be. It has its flaws like anything but I do not think QNX would want to loose market share to Microsoft's car products or to the other companies that I just can't think of the name of.

There is a reason this moron is an analyst and not running his own company.

The consensus of all of the analysts in 1990 was that IBM needed to be broken apart into component pieces as well. They even had a CEO who allowed each business unit to report results, etc. Then the board fired him (after watching the stock value cut to 25%) and hired an outsider who promptly said the analysts didn't know their **** from the mouth and that the value of IBM was the fact that it could bring the entire IT solution to its customers (which were BUSINESSES) and lined up the company to put the customer first and the stock value more than quadruppled and has been doing well ever since.

RIM has been confused about its markets and customers (because their traditional customers, the TELCO's, are being dis-intermediated by the retail/direct channels).
I think both Jim/Mike have realized this but have been slow to react. They need to step aside or bring in a COO who can change the culture to one of innovation and speed to market.

If these analysts knew how to run companies, they'd be commanding 7 figure salaries as CEO's.

Originally Posted by flyersfan76

But why. QNX on Phone and Tablet is the smallest part of their market. At least now it is and why would they want to loose market share in their core market to new competitors to the market like Microsoft. Ford Sync is not as good as people make it out to be. It has its flaws like anything but I do not think QNX would want to loose market share to Microsoft's car products or to the other companies that I just can't think of the name of.

QNX is intended to run on their phones and tablets, not on their data center hardware.

Originally Posted by ADGrant

QNX is intended to run on their phones and tablets, not on their data center hardware.

I was writing about what QNX as a whole. As in Subways, Nuclear Power Plant, Cars, etc.

That is why we would have to wonder where would QNX be since there is a whole other part of QNX that RIM cannot ignore.

Exactly what successful business has any of these "analysts" ran? Why do people continue to listen to them, and act on their advice, despite their negative prior results? Palm did this and it was a non starter. Their stock picking ability is no better than a monkey with a dart board...

I have heard analysts speaking of phones and its obvious the nitwit doesn't understand the difference between a GSM and CDMA phone.

That said, RIM needs to do something, but this is the most inane crap I've heard all day. And today, I have heard some really good ones.