Monday, 23 April 2012

RIM hires law firm to advise it on restructuring

RIM hires law firm to advise it on restructuring

April 21, 2012 Nadia Damouni and Alastair Sharp

BlackBerry maker Research In Motion has hired Wall Street law firm Milbank, Tweed, Hadley & McCloy to work out a restructuring plan that could include selling assets, seeking joint ventures or licensing patents, people briefed on the matter said.

As part of the struggling Waterloo-based smartphone maker’s strategic review, the RIM board is discussing ways to boost revenue from its new BlackBerry 10 operating system and possibly opening up its proprietary network, the sources said.
At one point, RIM was hoping to add as much as $4 billion in revenue from deals with major telecom carriers, sources said.
“This is a very mature strategy, and RIM was very far down the road with a lot of those discussions with carriers,” one of the sources added.
The restructuring efforts come as the Blackberry maker tries to stem customer losses to Apple Inc.’s iPhone and smartphones running Google Inc.’s Android software.
RIM posted a $125-million loss in its most recent quarter as it wrote down BlackBerry inventories. Three months earlier it took an even larger hit on its underperforming PlayBook tablet computers. RIM’s stock has plunged 75 per cent in the past 12 months, giving the company a market value under $7 billion.
Representatives for Milbank and RIM declined to comment.
A number of investment banks have approached RIM in recent months, vying for a role as financial adviser. But for now RIM is not expected to hire a banker unless it decides to sell off a major asset or if the company receives takeover interest from an industry competitor, the sources said. RIM has worked with Milbank previously.
RIM, which once dominated the smartphone market, appointed a new CEO, Thorsten Heins, in January when longtime co-CEOs Mike Lazaridis and Jim Balsillie resigned under pressure.
Before he left, Balsillie had led a three-pronged plan to double RIM’s service revenue by allowing carriers to use its services for messaging, content delivery, and analytics on all smartphones, sources with knowledge of his plan told Reuters.
Balsillie’s plan offered carriers a way to tempt budget customers to upgrade to smartphones, with a data plan restricted to social networking and messaging services. RIM started talks with the world’s largest telecom companies more than six months ago and they were still going on as late as January at the Consumer Electronics Show in Las Vegas.
But the board got cold feet on concerns about cost and fears that the company’s smartphones could lose more market share if the popular BlackBerry Messenger chat system was available on other devices. Balsillie quit RIM’s board in March.
Since late 2010, RIM had been taking steps to make its network services available to other devices and made a string of acquisitions to support that strategy, according to several sources with knowledge of the matter.

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