Why Research in Motion Is a Takeover Target 32 comments
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By Andrew Willis
Research In Motion (RIMM) rumors are something of a cottage industry. From trading desks to tech blogs, everyone has a theory on what's next for the BlackBerry maker.
At the moment, stock market chatter around Research In Motion puts the company in one of its vulnerable periods - to the extent a national champion with a $38.5 billion market cap can be considered vulnerable to a takeover. Specifically, there's talk on trading desks that with RIM shares changing hands at a relatively modest 15 times its forecast earnings, and half the levels seen in 2008, big dogs such as Microsoft (MSFT) are sniffing around.
There is nothing new in this line of speculation - for years, analysts and money managers have been debating the logic of various partners for Research in Motion.
There's also nothing right now to suggest talks are actually taking place between RIM and a potential suitor. Steve Ballmer hasn't been seen skulking about Waterloo, and even if he was, it wouldn't mean much, as the Microsoft CEO is a frequent visitor to Canada's top tech university, just down the road from RIM's head office.
However, there is a great deal of noise. So without further ado, here are a few reasons folks on the Street see Canada's largest tech company as a tempting target.
First and foremost, RIM occupies an enviable place at the top of the smart phone food chain. Any competitor that dreams of challenging Apple's (AAPL) iPhone for domination of the lucrative handheld market would see the BlackBerry as the logical way into the fray. And we know how Microsoft loves to mix it up with Apple.
Then there's the wave of consolidation that's playing out in tech. As markets recover, it's game on for mega-deals in this sector. A site called TheDeal.com noted earlier this week that when Hewlett-Packard (HPQ) recently dropped $13.9 billion (U.S.) to buy Electronic Data Systems (EDS), it inherited a RIM relationship. That newly-forged link means HP also gets mentioned as a potential suitor.
Within RIM, there's always been a well-developed streak of independence: co-CEOs Mike Lazaridis and Jim Balsillie have built a world-beating franchise in the face of continual skepticism.
But both executives are now reaching that stage in executive life when legacy and outside interests can take priority over building the next BlackBerry. As you may have heard, Mr. Balsillie has a passing interest in pro hockey. And Mr. Lazaridis has put $150 million (Canadian) of his dough into no less a challenge than figuring out the origins of the universe, backing Waterloo's Perimeter Institute for Theoretical Physics.
For this pair, and the RIM board, cashing out may hold an attraction now that never existed in the past. Despite their dominant personalities within RIM, neither executive holds anything close to control: The pair are RIM's largest shareholders, but each owns less than 6% of the equity.
Will RIM get taken out during this vulnerable phase? Or is the recent dip in this stock just another pause, before a new generation of smart phones sends the company's valuation soaring again? That, folks, is one of the hottest topics of conversation on the Street.
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This article has 32 comments:
On Nov 12 10:36 AM JamesApple wrote:
> The rise of Android makes the Canadian blackberrys virtually insignificant
> overnight. As economy improves, forward looking enterprise architects
> would choose Android over blackberry. The writings are on the wall.
> iPhone will take over nearly all of the consumer market share. As
> a result, Rim would simply fold its tent when the moment arrives,
> which is quite soon.
relic of the past.
MSFT already controls exchanges at enterprise not big value if Ballmer will cover it with more secured RIMM stations..
(but well, sometimes even Ballmer gets nuts and buy overpriced items like Aquantive)
Android is the real nea-term competitor. Iphone in the enterprise?
I dont buy it. It's like buying PS3 for having bluray box..
IMO, Nokia still a giant in slumber; what happens if it wake up?
On Nov 12 10:47 AM RiskCapital wrote:
> Well, you may be right. However, I just ditched AT&T because
> they tried to fix my iphone for the 3rd time only to find out it
> had a virus. It had one all along. They say it had it the moment
> I bought it. They can have all the apps. iphone is a POS. We will
> have to wait for a 2nd generation Android before we get one without
> glitches galore. Right now I am happy with my old Casio until I figure
> out what I want next. But I am taking my time. Not going to make
> another iphone mistake.
On Nov 12 10:47 AM RiskCapital wrote:
> Well, you may be right. However, I just ditched AT&T because
> they tried to fix my iphone for the 3rd time only to find out it
> had a virus. It had one all along. They say it had it the moment
> I bought it. They can have all the apps. iphone is a POS. We will
> have to wait for a 2nd generation Android before we get one without
> glitches galore. Right now I am happy with my old Casio until I figure
> out what I want next. But I am taking my time. Not going to make
> another iphone mistake.
A virus the moment you bought it? Har Har - I'm calling B.S. on that one! You'll have to try harder than that at bashing the iPhone. Sheesh!
I initially did take your comments seriously because I thought some of your opinions do make senses. However, after reading the comments you posted about RIM in the past month, I start to believe you have special agenda, which is to destroy RIM reputation by those untruthful statements. I just cannot believe that a very profitable company with excellent product (may not be that excellent in your mind) and leading position in the market has nothing good in your "unbias" opinions. By now, all your saying is to attach RIM. Your unconditional love with Apple does not make RIM a bad company necessarily. I don't know about your background. It appears that you have some degrees of knowledge in finance and investing. Even though those analysts bearish on RIM still think it is great company and current downturn is due to "possible" competition (remember, it is just possible not for sure yet and based on history, they were proved to be wrong.) So for your own interest, if you still want to maintain your reputation on this blog, please say something objective. Otherwise, your comments will only become B.S. and joke in my mind.
DUDE!! You are smoking crack. How much do you have riding??$$$$ to try and save your short ass.
PURE FUD. Period Dot END.
On Nov 12 10:36 AM JamesApple wrote:
> The rise of Android makes the Canadian blackberrys virtually insignificant
> overnight. As economy improves, forward looking enterprise architects
> would choose Android over blackberry. The writings are on the wall.
> iPhone will take over nearly all of the consumer market share. As
> a result, Rim would simply fold its tent when the moment arrives,
> which is quite soon.
On Nov 12 11:30 AM JamesApple wrote:
> If iPhone would be a freebie like those BOGOberrys or even PennyBerrys
> (Amazon sells blackberrys for a penny, google 'blackberry for a penny')
> then every Apple Store would have huge lineups from there all the
> way to the North Pole!
And yet a Rimm merger could be interesting. With who though? MSFT, is interested in its next gen phone OS, not owning yet another platform, having 3 is bad enough.
Nok, could have some interest, but again, platforms, and if getting a new one why not just jump on the goog platform..
Partnership might be a way forward, goog or msft could "buy" the blackberry with heavy funding and stick android / wm7 inside.
Every player with a big stack and any kind of draw will play this hand to the river. But remember this is a cash game, not tournament, so while one or two will go broke many will walk away with fortunes......
Hey James I got a free BMW for you, just buy my two year service contract......
On Nov 12 03:56 PM JamesApple wrote:
> True enough, you can still buy a PennyBerry from Amazon today, that
> is, of course, if you do want a PennyBerry.
This "JamesApple" character is infamous around here for mindlessly bashing RIMM and all of Apple's other competitors. You can safely ignore all of his comments because none of them contain objective insight.
On Nov 12 12:03 PM User 493712 wrote:
> Hi James,
> I initially did take your comments seriously because I thought some
> of your opinions do make senses. However, after reading the comments
> you posted about RIM in the past month, I start to believe you have
> special agenda, which is to destroy RIM reputation by those untruthful
> statements. I just cannot believe that a very profitable company
> with excellent product (may not be that excellent in your mind) and
> leading position in the market has nothing good in your "unbias"
> opinions. By now, all your saying is to attach RIM. Your unconditional
> love with Apple does not make RIM a bad company necessarily. I
> don't know about your background. It appears that you have some
> degrees of knowledge in finance and investing. Even though those
> analysts bearish on RIM still think it is great company and current
> downturn is due to "possible" competition (remember, it is just possible
> not for sure yet and based on history, they were proved to be wrong.)
> So for your own interest, if you still want to maintain your reputation
> on this blog, please say something objective. Otherwise, your comments
> will only become B.S. and joke in my mind.
Has anyone seen the new Nokia N900 - Let's not forget about NOK. I think they finally got this right.
Check this video of it out gizmodo.com/5401888/th...
Makes the Droid look scared! All they need now is a Carrier for it in the good old USA!
The company that could use RIM right now is Dell. In trying to get more enterprise business and also in brining out a new phone (offering multiple OS's if they add RIMM) they make a compelling case to corporate IT. Dell needs help, and this helps.
MSFT? doesn't add up for me, no matter how crazy Ballmer can get.
I wouldn't even consider trading my Blackberry for an Iphone for work, not that I have anything against Apple as I do not but would not use the Iphone for work.
Please state facts as there are none stated here of any kind. I am well versed with both companies, and keep up to date on each of them as I am heavily vested in each.
Disclosure:
I hold both RIMM and AAPL longs.
This market is in a very early stage of the bull market for smart phone.
The two major player are Apple and Rim.
This is the time to buy Rim shares as they have always come back
with better product.
Even Obama uses one this is the best advertisement if a company need one.
People who think that this company will fold are smoking something
bad. Wake up and join the party it is just beginning and Rim is a buying opportunity.
Microsoft, after it's underwhelming Zune experience, might look to Rim, but it's hard to believe that would help Microsoft in the long run. But Gates has made other decisions i didn't understand, so....
As to the guy with the iPhone that supposedly had a virus on it when he bought it... dude... go to an Apple store and make an appointment at the genius bar and get an informed diagnosis! The salesperson at Best Buy isn't qualified to tell you anything and he's use to PCs so he will always blame a 'virus'. Any Apple store that can't get your iPhone to work properly will give you a new iPhone that will! It's not like all Apple products arrive in perfect condition, though most do... but Apple does act responsibly and they are top rated for customer experience because they actually do care about their customers.
By the way, if i read your comment right, you'd go back if it switched to Verizon? Then where was the so called virus? You do know that the iPhone has Safari...system 10 (x) no viruses! Really...phone stores are notorious for not knowing anything about iPhones...yes, it's not great... but you have a warranty from Apple on your iPhone...call the 800 number and then send it back to Apple if you don't have an Apple store near you. They'll fix it or replace it...really.
Sorry, but it's not about devices, or even OS's (although you need both). Remember CPM/86 or OS/2? Or even the old Mac OS. They all looked like winners at one time, but were beaten from behind by a poorer product. And all those early iPhone comparisons saying something else was better, faster, cheaper or had more features. But people bought iPhones anyway.
Everybody does mobile messaging well enough now. RIM should sell to the first offer, but it's probably too late already. RIM's fallback task is to hold on to enough revenue for 5-10 years while it finds a new place. But I doubt if the management has that creativity in them, as Apple didn't before SJ's return.
I don't see RIMM as a take over target. Sure, they will have a steady cash stream, but it is a long shot that they will grow rapidly.
I think Palm is a better take over target than RIMM. It takes much less cash and you get a better OS. The downside is that there are fewer customers so again, it is a risk as to whether they will grow rapidly.
You are very foolish in your comments. RIMM is the number 1 company this year in Forbes.
You should post facts and not personal opinions. Did you have a bad experience with RIMM?
Have you made over $250k in the market? If not, shut your ragged mouth.
On Nov 14 01:30 AM JamesApple wrote:
> Rim should be out of business no later than year 2013.
If you didnt make over 250m in the market you gotta shut your f up as well (and that's your own logic)
[I own no APPL, MSFT, RIMM, AIG, C, ex-MER, ex-BSC]
On Nov 14 02:35 AM User 506787 wrote:
> Do you own APPLE stock? Every time I see you post about RIMM it is
> always negative. This company is worth billions $$$$$$$$$$
>
> You are very foolish in your comments. RIMM is the number 1 company
> this year in Forbes.
>
> You should post facts and not personal opinions. Did you have a bad
> experience with RIMM?
>
> Have you made over $250k in the market? If not, shut your ragged
> mouth.