Can Microsoft RESCUE Research in Motion?

Microsoft (NASDAQ:MSFT) approached Research In Motion (NASDAQ:RIMM) earlier this year to discuss a partnership that would have the Blackberry maker abandon its own software in favor of Windows Phone as the main operating system for its smartphones.

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Microsoft chief executive Steve Ballmer approached RIM shortly earlier this year to try and strike a partnership similar to the one it has with Nokia (NYSE:NOK), Reuters reported. Microsoft may even try and buy a stake in RIM and fund marketing and other expenses. However, since the latter will end RIM’s technology independence, its board is reportedly not entirely thrilled with the arrangement. Microsoft could also be interested in RIM’s wireless patents, Reuters said.

Earlier this year, RIM asked JPMorgan Chase (NYSE:JPM) and Royal Bank of Canada to discuss possible strategic changes for the company. But the latest setback has increased pressure on RIM’s board to more seriously explore options, including measures that would amount to an admission that its current strategy is unsustainable.

The Canadian company announced a higher-than-expected quarterly operating loss on Thursday and declared a delay in the release of the next version of its phone, sinking its shares. The company’s stock has now fallen about 70 percent in the past year as the once-smartphone leader struggles in the face of the huge success of Apple’s (NASDAQ:AAPL) iPhone and Google (NASDAQ:GOOG) Android-powered devices.

The launch of BlackBerry 10 has been postponed to early 2013, more than a year later than initially promised. The company said in a statement that development had “proven to be more time-consuming than anticipated.”

On a conference call with analysts, RIM chief financial officer Brian Bidulka said working capital management was one of the areas of focus for the company. It is also trying to reduce costs by about $1 billion, including by cutting about 5,000 employees.

“They need to get to a strategic decision soon,” said Scott Sutherland, an analyst at Wedbush Securities. . “Even though it may cause some near-term pain if you separate the business, it might be the best course of action.”

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