Amazon said to have held merger talks with BlackBerry maker RIM, while Microsoft and Nokia also considered a bid

This article is more than 8 years old

This article is more than 8 years old

BlackBerry maker Research in Motion has turned down takeover overtures from Amazon.com, while Microsoft and Nokia considered a bid for the troubled smartphone maker, according to sources.

Amazon hired an investment bank this summer to review a potential merger with RIM, but it did not make a formal offer, one of the sources told Reuters.

It is not clear whether informal discussions ever led to specific price talk.

A RIM investor who declined to be named said the company was now essentially up for sale.

"This story puts RIM in play, because shareholders are going to put it in play," the US-based investor said. "It's over. This is now a company where the activists are in charge."

Battered shares in the Canadian smartphone maker jumped 10% in after-hours Nasdaq trade after the Reuters report.

But RIM's market value has plunged 77% in the past 12 months to value it at about $6.8bn (£4.3bn) – below its "book value" of assets – following a series of disappointing quarterly reports, delayed phone launches, weak sales of the PlayBook tablet and other missteps.

The shares tumbled last week on weaker-than-expected quarterly results, which saw profits crash by 70%, and the announcement of a delay in the launch of the new BlackBerry 10 phones until late 2012.

RIM's board wants co-chief executives Mike Lazaridis and Jim Balsillie to focus on trying to turn around the business through the launch of new phones, better use of assets such as BlackBerry Messaging and restructuring, two sources told Reuters.

RIM and Amazon declined to comment.

The Wall Street Journal reported that Microsoft and Nokia, which have teamed up to produce phones running the Windows Phone software, explored the idea of a joint bid, and that senior executives from all three companies "frequently meet to discuss ways to enhance their partnerships".

One source confirmed to Reuters that Microsoft and Nokia had explored the idea of a bid.

While RIM could strike technology licensing deals and other kinds of commercial partnerships to boost revenue, an outright sale or joint venture is not thought to be on the cards for now.

"They have had approaches from folks who have wanted to have discussions," said one head of technology investment banking at a Wall Street bank. "The issue is it is hard to find a value that makes sense with a falling knife."

Activist shareholder Jaguar Financial has called for a sale of RIM as a whole or in separate parts, such as the handset business, the network services operation, or the patent portfolio. It is due to have a key meeting with RIM early in January over its management.

RIM's managers have told interested parties they do not want to sell or break up the company, the sources told Reuters.

After last week's news, the board instructed the co-CEOs to set aside any options for a sale, one person briefed on the situation said.

"Selling the company or an economic joint venture is probably not in the cards right now," the source said. "Until you stabilise the platform, people are going to be very nervous about spending $10bn or more."

Some potential corporate and private equity suitors are holding out for RIM's valuation to fall further, sources said.

The Wall Street Journal said that RIM had approached Samsung, the world's biggest smartphone seller, and HTC, the biggest seller of Android phones in the US, about licensing its forthcoming handset operating system, now due late in 2012

But it added that RIM shows no signs of abandoning its handset business.

The sources told Reuters that Amazon and RIM are still discussing ways to expand their commercial ties, which include a service launched last year to make Amazon's music catalog available to some BlackBerry users. RIM recently launched a service called BlackBerry Music which offers music to handset owners.

Amazon launched the Kindle Fire tablet in November, which, along with the content the company can package with it, is seen as a potentially formidable contender to Apple's iPad and iTunes store.

Amazon does not make smartphones, but recently there have been rumours that it might extend into that space to round out its offering. Amazon has $6.3bn in cash reserves, so any bid for RIM would have to be debt-funded or use a cash-and-shares offer.

As for RIM, it feels it could better leverage its assets, such as the BBM instant messaging and the network operation centres that allow for messages to be processed, the sources said.

RIM could also look at licensing out its QNX operating system after the late 2012 launch of BlackBerry 10, which will be the first smartphones using that software, to give handset makers an alternative to Google's Android operating system.

RIM's co-CEOs have spent months listening to ideas from investment bankers, strategic parties and private equity firms. These discussions are now viewed as distracting for management, sources briefed on the situation said.

One of them said the board has backed both Lazaridis and Balsillie, but is of the view RIM needs to develop a "deeper bench" of executives.