Microsoft-RIM Rumour Has Tech Giant Investing $3.5 Billion In BlackBerry Maker

The Huffington Post Canada  |  By Posted: 04/11/2012 1:15 pm Updated: 04/11/2012 1:15 pm

Once again, it’s the season for RIM takeover rumours, and this time it’s Microsoft that is said to be interested in the struggling BlackBerry maker.

Weeks after a dismal quarterly earnings report prompted the departure of RIM co-founder Jim Balsillie, and a general exodus of executives from the company, the financial blog Benzinga is reporting that "Microsoft is prepared to make a $3.5 billion investment in Research in Motion, according to sources.”

Neither Microsoft nor RIM would confirm the claim to Benzinga.

As IT World Canada notes: “No word about what the money would be for, what Microsoft would get out of the deal -- a stab in the dark might be for access to [RIM’s secure messaging service] BBM -- or how it would tie the two companies together.”

To be sure, there have been plenty of rumours like this floating around over the past year, as RIM has seen its market share, stock price and earnings slide.

In September, it was reported that activist investor Carl Icahn was planning to buy into the company. That was followed by claims that U.K. telecom giant Vodafone was interested in taking over the Waterloo, Ontario-based company. Then came claims Amazon.com was interested in the company.

In January, reports surfaced that then-co-CEO Balsillie was meeting with Samsung execs about a buyout, but the asking price may have been too high.

Reports at the time indicated RIM rebuffed many of the offers, preferring to go it alone. But comments from the company’s recently installed CEO, Thorsten Heins, that all options are on the table suggest the company may be more open now to a buyout.

But some analysts question why anyone would want to buy the struggling company, which saw revenue drop to $4.2 billion in the fourth quarter of 2011, down from $5.6 billion in the same quarter a year earlier.

There are not that many buyers left” for RIM, Recon Analytics analyst Roger Entner said, as quoted at the Toronto Star. “BlackBerry is running out of sugar daddies.”

Asked on CNBC last week if there was room in the market for RIM in a world increasingly dominated by Apple’s iPhone and Android phones, Piper Jaffray analyst Gene Munster replied “no.”

Research In Motion is out of business,” Munster said, listing off a number of other phone makers -- including Nokia -- that he believes won’t survive in the new Apple- and Samsung-dominated era of smartphone and tablet computers.

RIM'S BIGGEST SETBACKS OVER THE PAST YEAR

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  • Blackberry PlayBook Flops, Prices Slashed

    The PlayBook tablet, which was the BlackBerry maker's answer to the iPad, went on sale in April 2011. Since then, <a href="http://www.huffingtonpost.com/2012/01/03/blackberry-playbook-price-rim_n_1181167.html" target="_hplink">RIM has lost $485 million</a> on unsold units. At the beginning of January, <a href="http://www.huffingtonpost.com/2012/01/03/blackberry-playbook-price-rim_n_1181167.html" target="_hplink">RIM slashed the price of all models</a> of its tablet to $299. The special pricing will last until February 4. PlayBooks, which come in 16, 32 and 64 gigabyte models, typically retail for $499, $599 and $699, respectively, <a href="http://news.cnet.com/8301-1001_3-57351162-92/blackberry-playbook-price-now-$299-for-all-models/" target="_hplink">according to CNET</a>. In November, RIM temporarily <a href="http://www.huffingtonpost.com/2011/11/22/blackberry-playbook-price-drop_n_1107941.html" target="_hplink">slashed the price</a> of the 16GB version of the tablet to $199 at certain retail locations.

  • Network Outages

    In October, BlackBerry <a href="http://www.huffingtonpost.com/2011/10/13/blackberry-outage-2011-rim-says-services-returning_n_1008596.html" target="_hplink">suffered an outage that affected</a> many of its then 70-million worldwide users, leaving some of its customers in Asia, Europe, Latin American and Africa without service for as many as three days. Some users in the U.S. were affected, but not for as long a period.

  • Drunk Execs Disrupt International Flight

    In December, two RIM executives were fired after a flight they were on was forced to be diverted because the pair's "drunken rowdiness," <a href="http://www.huffingtonpost.com/2011/12/02/two-men-face-hefty-fine-a_0_n_1125214.html" target="_hplink">the AP reports</a>.

  • BlackBerry 10 Platform Delayed

    Research in Motion announced in December 2011 that its highly anticipated BlackBerry 10 platform won't be available until the end of 2012. <a href="http://www.huffingtonpost.com/2011/12/16/blackberry-10-phones-rim_n_1153314.html" target="_hplink">According to the AP</a>, the company claims the holdup is because the chipset needed for the phones running the platform won't be available until the middle of this year.

  • Stock Slides In 2011

    In 2011, <a href="http://www.dailyfinance.com/quote/nasdaq/research-in-motion-limited-usa/rimm" target="_hplink">RIM's stock</a> dropped <a href="http://www.huffingtonpost.com/2012/01/23/rim-ceos-jim-balsillie-mike-lazaridis_n_1222605.html#s629929&title=Lessien" target="_hplink">a massive 75 percent</a>.

  • Falling U.S. Market Share

    In less than a year, RIM's share of the U.S. smartphone market <a href="http://www.huffingtonpost.com/2012/01/23/rim-ceos-jim-balsillie-mike-lazaridis_n_1222605.html#s629929&title=Lessien" target="_hplink">dropped by almost 50 percent</a>, from <a href="http://www.comscore.com/Press_Events/Press_Releases/2011/3/comScore_Reports_January_2011_U.S._Mobile_Subscriber_Market_Share" target="_hplink">30.4 percent</a> in January 2011 to <a href="http://www.comscore.com/Press_Events/Press_Releases/2011/12/comScore_Reports_November_2011_U.S._Mobile_Subscriber_Market_Share" target="_hplink">16.6 percent</a> in November 2011. In 2009, <a href="http://www.huffingtonpost.com/2011/12/16/blackberry-10-phones-rim_n_1153314.html" target="_hplink">RIM controlled 44 percent</a> of the US smartphone market. (Pictured above is the HTC Desire HD Android, which runs on Google's much more popular Android platform.)

  • Investors Urge Company Sell Itself

    A nearly 75 percent drop in stock price in 2011 did not please investors. At the end of 2011, Jaguar Financial Corp, <a href="http://www.huffingtonpost.ca/2012/01/03/balsillie-lazaridis-rim-research-in-motion-jaguar-financial_n_1180885.html" target="_hplink">one of the largest investors</a> in RIM, called "for substantial corporate governance change and for a sale of RIM, whether as a whole or as separate parts." Vic Alboini, the chief executive of Jaguar Financial, <a href="http://www.bbc.co.uk/news/business-16393180" target="_hplink">told the BBC earlier this month</a> that RIM has "lost it." "The party is over, we believe, in terms of trying to design that cool, tech savvy smartphone," he said. "Microsoft has over $50 billion in cash, RIM has $1.5 billion. There is no way they'll be able to compete."

  • Exploding BlackBerry

    The family of 11-year-old Kian McCreath of Coventry, U.K., gave RIM some of its worst publicity in 2012, telling the media the boy was burned and left with permanent scarring when his BlackBerry Curve 9320 exploded. Although cell phones that are left to charge too long are known to explode, for RIM the news represented a horrible publicity disaster that came just weeks ahead of the launch of its BlackBerry 10.

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