Last Friday’s news that Motorola (MOT) has agreed to buy the wireless email provider Good Technology has triggered speculation on what it might mean for the key players in the business, in particular Palm (PALM) and Research in Motion (RIMM). The consensus seems to be that it is marginally bad news for RIMM, but that it shouldn’t affect them in the short-run; but that it is certainly bad news for Palm, which could be forced to find a buyer.
Jonathan Hoopes, an analyst with ThinkEquity Partners, who has previously said he thinks Palm could be acquired, thinks the Good deal makes it even more likely, “as participants in the quickly evolving communications space seek to build their asset portfolios in an effort to establish defensible positions.” The issue for Palm is that the company was closely allied with Good, providing the software on Treos for enterprise customers. Hoopes says that “Motorola’s actions could have a significant and adverse effect on Palm’s prospects if it remains an independent entity.”
James Faucette, an analyst with Pacific Crest, sounds a similar note, warning that over time Motorola could stop providing multivendor support for the Good platform, “and hence much of [Palm’s] ability to penetrate the enterprise market.”
Rob Sanderson, an analyst with American Technology Research, advises investors considering Palm shares as a takeover play to wait for a better price, “as potential acquirers will most likely wait - they undoubtedly see the company’s weaknesses.”
Neither Sanderson nor Faucette see any near-term issues for Rearch in Motion; Faucette writes that any impact is at least 12-24 months out, and Sanderson asserts that the deal isn’t “landscape changing.”
Faucette, by the way, expects the Good deal to dilute Motorola’s profits by 2-3 cents a share in 2007. Terms of the acquisition have not been disclosed.
In trading today:
- Motorola is down 7 cents to $21.31.
- Palm is up 42 cents at $15.03.
- RIM is up $3.56 at $127.67.