For years, Research In Motion (RIMM) was the Wall Street darling. Each quarter, the company delivered better-than-expected results, as its BlackBerry smartphone took over conventional phones, driving its stock to the stratosphere and even outperforming Apple (AAPL).
Now with RIM reporting one disappointing quarter after another, Wall Street is turning its back on the company. Recently, the stock fell below $10, its lowest level since 2003. This brings RIM's market capitalization to $5.15 billion. But, does this valuation make the company an attractive takeover target? Which companies could be interested?
1. Apple
Apple has plenty of cash sitting in the bank, around $28 billion. But, what kind of value can a company like RIM offer to Apple? After all, Apple has its own iPhone brand which dominates the market. But, an area where the BlackBerry has consistently outperformed the iPhone is the professional market - many people use their Blackberry as work phones. If Apple acquires RIM, it will have a virtual choke hold over both the consumer and professional smartphone markets. Still, an acquisition is unlikely and certain SEC regulatory rules may prevent Apple from taking over its competitor.
2. Google (GOOG)
With its recent takeover of Motorola Mobility (MMI), Google has proven its readiness to acquire mobile phone companies. Will Research in Motion be the next target? Perhaps not, Google already has plenty on its hands with Motorola. Until Google sees the results of its latest acquisition, I doubt whether another acquisition will be in the offing. Not to mention RIM's BlackBerry does not use the Android OS, making Google and RIM an unlikely match.
3. Hewlett-Packard (HPQ)
Perhaps RIM would have been a better acquisition than Palm for Hewlett-Packard back in 2010. However, at that point in time, RIM's stock was trading in the stratosphere, probably too expensive for Hewlett-Packard to afford. Now, with Hewlett-Packard strategically exiting the smartphone and tablet industies, while acquiring Autonomy Corp (AUTNF.PK), it is very unlikely that HP has the resources or desire to buy Research In Motion.
4. Microsoft (MSFT)
Microsoft has been looking to gain momentum with its Windows Phone OS in the smartphone market, but among Apple's iOS and Google's Android, Microsoft seems to always be left out of the conversation. Microsoft does have the resources to acquire RIM and the desire to expand its reach in the smartphone industry. However, Microsoft has its own smartphone OS that is not very similar to RIM's BB7 or QNX, making Microsoft an unlikely suitor for RIM.
5. Samsung (SSNLF.PK)
Samsung already is a major player in the smartphone industry with its cutting edge Galaxy series of smartphones. Acquiring RIM could benefit Samsung in gaining more market share in the corporate smartphone niche, an area that is predominately controlled by RIM. On the other hand, RIM has little to offer Samsung technology wise.
Bottom Line
Despite its relatively low price, Research in Motion still isn't a likely takeover target for major tech companies in the smart phone industry. Investors who bet on this prospect may be disappointed.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
