BlackBerry 10 may be too late as Morgan Stanley downgrades “essentially broken” RIM

Financial services provider Morgan Stanley has downgraded the stock of RIM, as fears grow that its BlackBerry 10 launch will not be enough to turn around the company's fortunes.

Shares in RIM traded at their lowest level since 2003 yesterday, sinking to $9.27 (£5.78) on the Toronto Stock Exchange. The news came as Morgan Stanley lowered the Canadian firm's standing to ‘underweight', and company analyst Ehud Gelblum believes the manufacturer's crisis is deeper than many think.

"We believe the fundamental story at RIM is essentially broken and that the most likely way to unlock value from the company is through either a strategic option or selling off the operations," Gelblum said.

"We therefore believe the next six to nine months are likely filled with the competing factors of rapidly deteriorating fundamentals on the one hand and stories of potential strategic options on the other, leaving the stock pushed and pulled strongly in both directions."

"Strategic options" have certainly been on the ailing firm's agenda of late, after the company hired JPMorgan Chase & Co. and RBC Capital Markets to help evaluate its business. But RIM denied that it was planning to split into two separate operations, as had been reported.

Hopes have been pinned on the forthcoming release of the BlackBerry 10 OS, but Gelblum suggests the 10 to 20 million customers expected to stay loyal to the platform will not be enough to revive RIM as a whole.

"To reach break-even, at those revenue numbers, we calculate the company would have to eliminate 90 per cent of its 16,500 employee base," he said, highlighting the state of the company's balance sheet.

RIM has already begun cutting jobs, as major culls were revealed last week as part of a plan to save $1 billion by the end of its 2013 financial year.

Source: Canadian Business