Blackberry maker may be on the verge of being sold for parts on back of profit warning
Following a profit warning on Tuesday, RIM has bought in M&A expert bankers from Royal Bank of Canada (RBC) Capital Markets and JP Morgan help the business consider its strategic options, according to president and CEO, Thorsten Heins.
On Tuesday this week Heins issued a profit warning on the Blackberry maker's first quarter results, as sales have dropped drastically. The company expects to report an operating loss for the quarter, and is planning major redundancies and further cost reductions as a result.
RIM's share price hit a 52 week low of $10.30 yesterday on the news of the profit warning, after dropping 82 cents (7.14%) to close on $10.66, opening this morning at $10.35.
Heins stated: 'The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace, and we expect our Q1 results to reflect this, and likely result in an operating loss for the quarter.'
However, RIM's hiring of bankers from RBC Capital Markets and JP Morgan looks like another nail in the coffin as a sale is considered.
While Heins claimed the bankers were on board to help with a strategic review of the company, including 'to evaluate the relative merits and feasibility of various financial strategies, including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives,' the sale of the business, given the crashing share price and upset shareholders, has to be on the cards.
Yet despite looking cheap on paper with $2 billion in the bank plus no debts, giving the company a market capitalisation of $5.5 billion, down from a massive $84 billion at the company's prime back in 2008, the question is who would want to buy it?
Those that could be interested are already beating RIM over the head with their own products, leaving RIM with the main option of being chopped up and sold for scrap, including patents worth approximately $2.5 billion.
RIM's fortunes give new meaning to 'how the mighty have fallen'.