Research In Motion Downgraded on Talks of Company Split
On Monday morning, reports indicated that struggling Blackberry-maker Research in Motion (NASDAQ: RIMM) is considering splitting its business into two. The company would separate its handset manufacturing division from its messaging network, according to a report in the Sunday Times. According to that article, the handset division may be listed as a separate company or sold off.
According to CNBC, The Sunday Times speculated that potential buyers could include Amazon (NASDAQ: AMZN) or Facebook (NASDAQ: FB). RIM's messaging network might also be sold according, or opened up to rival companies such as Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG). In other RIM news on Monday, analysts at Morgan Stanley (NYSE: MS) downgraded the stock to Underweight with a $7.00 price target. The analysts noted that immediate asset sales or other "strategic options" could unleash around $15.00 in value, but called such a move "unlikely."
This seems to be in line with the outlook provided by Research in Motion's management which said in a statement that it continued to believe the best way to drive shareholder value was to execute its turnaround plan. Morgan Stanley analysts wrote that "RIM is likely to significantly miss estimates in its FQ2'13 August quarter as it gets hit with the triple whammy of an aging portfolio of devices, the standard pause in unit shipments ahead of the launch of its BB10 phone and the overall swoon in the smartphone market."
The firm also lowered its full-year 2014 revenue outlook to $7 billion from $9.7 billion, which compares to current consensus revenue estimates of $12 billion. On Monday, RIM shares fell, and were trading down more than 7%, just above $9.00. Nokia (NYSE: NOK), another struggling phone maker, is also getting crushed. On Monday afternoon, Nokia shares traded down over 7.50%.
Latest Ratings for RIMM
|Jan 2013||Credit Suisse||Downgrades||Neutral||Underperform|
|Jan 2013||Evercore Partners||Downgrades||Equal-weight||Underweight|
|Jan 2013||Standpoint Research||Downgrades||Buy||Hold|
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