RIM Gains After CEO Comments on Strategic Options

Jan. 22 (Bloomberg) -- Research In Motion jumped in early trading as investors continued to react to comments from the BlackBerry maker that it’s considering strategic options including a sale of its hardware production unit. Dominic Chu reports on Bloomberg Television's "In The Loop." (Source: Bloomberg)

Research In Motion Ltd. (RIM) jumped to its highest level since late 2011 after Chief Executive Officer Thorsten Heins reiterated the BlackBerry maker is considering strategic options, including selling its hardware unit.

RIM advanced 13 percent to $17.90 at the close in New York, the highest price since Dec. 1, 2011. The stock has more than doubled since late September amid growing optimism for the company’s new BlackBerry 10 devices due Jan. 30. Scotiabank today raised its rating on the shares to sector outperform, saying revenue from customers upgrading to the new devices alone could top analysts’ estimates.

RIM’s strategic options include “the sale of hardware production as well as licensing of our software,” Heins was reported as saying in an interview with German newspaper Die Welt published Jan. 20, which drove the company’s shares up 11 percent yesterday in Toronto when U.S. markets were closed. Nick Manning, a spokesman for the Waterloo, Ontario-based company, said those are examples that Heins cited among the possibilities under consideration in a strategic review.

Christian Paradis, the Canadian industry minister, said in an interview today that he hopes RIM will grow “organically” and wouldn’t speculate on a possible sale. Industry Canada would have to examine any sale to determine if it needs to be reviewed under the country’s foreign-takeover law, he said.

“We hope to see companies like RIM grow up organically to become global players,” Paradis said.

Strategic Review

The company hired JPMorgan Chase & Co. (JPM) and RBC Capital Markets in May to help it evaluate options. While Heins hasn’t ruled out a sale of the company, he has said RIM’s focus is on exploring strategic partnerships or software licensing deals. RIM is looking to the new BlackBerry 10 devices to reverse a sales slide, helping it win back market share lost to Apple Inc. (AAPL)’s iPhone and handsets that run Google Inc. (GOOG)’s Android software.

The strategic review continues “but there is no reason for us to rush to decide,” Heins was quoted as saying by Die Welt. “First and foremost, it’s important to bring BlackBerry 10 successfully to market.”

Gus Papageorgiou, a Scotiabank analyst, raised his rating from sector perform and said the device maker will deliver more than 29 million BlackBerry 10 devices in fiscal year 2014.

Kevin Smithen, an analyst at Macquarie Capital in New York, said in a note that he expects “several strategic alliances to be announced over the next several weeks.”

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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