Research In No Motion: Who's Left to Buy RIM?
NEW YORK ( TheStreet) -- Research In Motion (RIMM) CEO Thorsten Heins wants to fix the beleaguered handset maker, but would not rule out a potential sale during the company's fourth-quarter conference call. The big question, though, is who would buy the struggling BlackBerry maker?
The Waterloo, Ontario-based firm reported weaker-than-expected fourth-quarter numbers with Heins acknowledging that RIM needs "substantial change."
RIM posted non-GAAP earnings of 80 cents per share on $4.2 billion in revenue in its fiscal fourth quarter. The average estimate of analysts polled by Thomson Reuters was for a profit of 81 cents a share on revenue of $4.5 billion.
In a research note to investors, Raymond James analyst Steven Li noted that Heins has not ruled out the possibility of a sale as part of the company's strategic review. The RIM CEO also mentioned leveraging the BlackBerry platform through partnerships, licensing opportunities, and strategic business model alternatives. Li lowered his price target to $15 following the earnings report, but said that the company could be worth $19 to $20 a share if a takeout happened. He rates shares "market perform."
The problem with the takeout scenario, according to a hedge fund analyst, who declined to be named, is that there don't appear to be any publicly-traded companies eager to buy RIM. "I'm not sure there is an acquirer out there who has the strength/position to really enable them to right themselves," he said. "I think Microsoft(MSFT) made their bet,
Microsoft and Nokia previously looked at buying RIM, but decided to pass.
RIM, of course, is seen as a source of national pride in Canada, employing 17,500 people, many of whom are located in the town of Waterloo. Watching the company lose market share to Apple(AAPL) and Google(GOOG) is clearly tough in a difficult economy, not only for shareholders, employees and management, but also for the Canadian government.
Set against this backdrop, there is the possibility of the Canadian government stepping in and preventing a takeover from a foreign company, as it did with Potash(POT) and BHP Billiton (RIMM) , saying the deal was not in the country's national interest.
With a market cap of $7.5 billion, though, RIM is still too large for private equity firms to have interest in, even for the Ontario Teachers Pension Plan (OTPP), which attempted to buy BCE(BCE) in 2007. The OTPP could prevent a takeover and keep RIM under Canadian control, but an exit plan is necessary. "Why would they