What’s Next for Research In Motion?

The news that Research In Motion is looking at last resort split-and-merger options has definitely gone beyond the grapevine. Rumors began circulating last month when it was reported that RIM hired bankers RBC and JP Morgan to help the company formulate alternative avenues to save it before it finally runs out of gas. This course of action, however, was initially put on the backburner, especially after RIM’s fortunes seemed to be turning around when they unveiled their BlackBerry 10 mobile operating system at the BlackBerry World 2012 convention in May. However, when Apple demoed the superior iOS 6 at last month’s World Wide Developers Convention 2012 – convincing even the most stalwart Berry fans to finally tradein BlackBerrys for iPhones – RIM’s merger plans immediately became an imperative.

It’s no secret that Research In Motion has had an extreme financial downturn as of late. Once the king of the smartphone hill, RIM has seen its market share dwindle increasingly since Apple entered the fray half a decade ago. RIM’s first quarter fiscal reports for this year indicate a loss of about $125 million, which is a stark contrast to the $934 million profit they posted in last year’s first quarter; and even that figure is a far cry from the numbers they were reaching pre-iPhone. As it stands, the company currently has a net worth of just $1.77 billion, which really isn’t saying much for a company of this stature. More and more consumers are driven to sell old BlackBerrys and switch to the competition’s smartphones as the years went by, deeming the company’s preemptive effort with the bankers a sound move for what it’s worth.

The most viable option that RIM sees for itself is in selling shares of their handset division; and if worst comes to worst, auctioning the whole division off entirely. The two frontrunners for this merger deal are Amazon and Facebook, with each company standing to gain something from the deal, as well as having certain impediments which could delay (or outright cancel) said deal.

Amazon is an online retailer of books, movies, music and games along with used electronics and it wants to have a smartphone release follow up on its Kindle Fire tablet, and the BlackBerry acquisition could give it the resources it needs. Interestingly enough, the company doesn’t have plans of selling BlackBerrys (or whatever it is Amazon want to call the smartphones) at a markup. Instead, it is looking to use BlackBerry as a channel for its mobile commerce venture. However, Amazon already has something like this arranged with Android; and although not the full-fledged company-owned channel that they want, the Android deal is currently working well for them, which could make them think twice about the BlackBerry acquisition.

As for Facebook, the company is actually looking to expand its business by going into the smartphone market, and acquiring BlackBerry could give it a much-needed head start. However, the company is also facing (no pun intended) financial woes of its own, making the merger deal a second priority for them at the moment.

However the merger deal may go down, it’s evident that Research In Motion needs to have something happen if they wish to be saved from total demise.