RIM: acquisition rumours once again circulating

The group’s financial results are not convincing, two product launches have been delayed and their future looks uncertain… Handset manufacturer RIM isn’t in the best shape and their stock price has taken a significant hit, which could lead to large groups running the figures for a potential acquisition.

The rumour isn’t new, but it has come to the fore once again due to turbulence over the last few weeks due to earnings alerts, the launch of new devices being delayed and poor financial results – all items which are not reassuring investors.

Research in Motion (RIM), manufacturer of BlackBerry handsets, has seen their share price fall significantly since releasing their 2012 financial year first quarter results, meaning that they are now vulnerable to an acquisition attempt.

Bloomberg reports that the company has lost so much value that an acquirer could pay a 50% premium to the share price and still pick up a good deal compared to the value of similar industry players.


Strong potential
Since RIM has good potential, notably in the professional market, an eventual acquirer will get their hands on experienced mobile messaging, secure communications, handset manufacturing and mobile services… without having to start at zero.

RIM also possess good presence in both the United States and abroad, which isn’t the case for Nokia (weak in the United States), something which also worked against Palm in their day (strong presence in the United States). The brand also comes with a strong image, and elements which would allow control by a third party to be easily taken over.


Benefits for an eventual acquirer
Analysts also envisage an acquisition could be made for between 4à and 50 dollars per share, while the current share price is at 26 dollars. Among the potential candidates, the greatest opportunities would be with Microsoft or Dell.

In Microsoft’s case, this would allow them to obtain a critical mass (RIM should have more than 75 million clients by the end of the year) which they don’t yet have with Windows Phone 7, with the platform allowing them to once again specifically target professionals.

For Dell, this would be a good occasion to deploy and strengthen their mobile telephone activity which is struggling to gain a foothold due to strong competition from already established players. The American computer manufacturer has already made some product launches, initially in China, with the company then looking at moving international.

Once again, RIM’s professional dimension may interest Dell whose main business activity is within enterprise. We can also cite Chinese manufacturers Huawei and ZTE, who have decided to become leaders of the Smartphone market who may use such an acquisition to accelerate their growth in addition to the use of Android handsets. We now need to wait and see if RIM is able to remain independent in a market where pure players are becoming increasingly rare...