RIM Will Die an Old Maid

Research In Motion (Nasdaq: RIMM  ) is moving higher today, as dueling reports find the BlackBerry maker at the center of amorous attention.

Reuters is reporting that Amazon.com (Nasdaq: AMZN  ) brought in an investment banker this summer for exploratory talks on a RIM buyout. Sources are also telling The Wall Street Journal that a hungry Microsoft (Nasdaq: MSFT  ) and a fretful Nokia (NYSE: NOK  ) have had informal takeover talks.

Amazon's interest apparently diminished shortly after it started, without a formal offer being made. There's no update on where Microsoft and Nokia stand on a joint acquisition of the beleaguered RIM.

Let me save you the speculation, suspense, and aggravation. A deal isn't happening. RIM will die alone, leaving behind a dozen cats and even more regrets of the ones that got away.

I'm not trying to be mean. RIM is too proud to settle for settling down. The Reuters' source claims the Canadian smartphone pioneer has been telling interested parties that it doesn't want to entertain an acquisition. RIM also isn't exploring economic joint ventures -- along the lines of what Microsoft squared away with Nokia earlier this year -- or entertaining the sale of individual components including its patent portfolio or handset business.

Now we find RIM trading at an eight-year low -- off by a whopping 78% this year alone as of last night's close -- and it's the one being choosy.

Wow.

Quite frankly, the rumored interest itself is surprising. Analysts see revenue and earnings falling this fiscal year, only to decline again in fiscal 2013. Why buy RIM now when it will only get cheaper down the line?

The bullish argument for RIM -- and it's no doubt what's clouding the company's judgment -- is that the stock has declined at a headier clip than its fundamentals. Obviously RIM isn't 78% less of a company than it was when the year began. It closed out its latest quarter with a record 75 million BlackBerry users!

Unfortunately, it's seeing things through BlackBerry goggles. Buying a smartphone platform -- at any price -- hasn't historically been a good decision. Hewlett-Packard (NYSE: HPQ  ) no doubt wishes it could turn back the clock on its Palm acquisition.

If companies are brave or stupid enough to consider buyout offers or single out prized assets, then who is RIM to be the greedy one?  

The next trillion-dollar revolution will be in mobile, but it won't include RIM. If you want to cash in on the upcoming trend, a new report will get you up to speed. Yes, it's as free as this article, but it won't last forever so check it out now.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for HP. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

The Motley Fool owns shares of Amazon.com and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft and Amazon.com. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (1)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 21, 2011, at 10:59 AM, plange01 wrote:

    both rimm and yahoo will be bought out in 2012 at a nice profit for investors with the courage to take a chance.....

  • Report this Comment On December 21, 2011, at 11:37 AM, melegross wrote:

    No, RIM is a terrible investment. Sales are falling, profits are dropping. The new OS is going to be at least six months late, with no idea as to whether it will be received well.

    It may be below book value, but I've seen this happen before. That's bad news, because if there are any investors looking, they're likely the "buy them up real cheap and break them up for the value" crowd.

    But they won't be interested until the stock goes low enough sonthat a buyout will be less than that book value. If someone bought the company now, the premium. Could bring the price to the book value, or too close to it. It would have to drop below $10, and then there could be some interest.

  • Report this Comment On December 21, 2011, at 12:19 PM, Peralejo wrote:

    What I never see is technical comment on the qnx system which they tout as something quite good and advanced. Apple was shot too and roared back. Does anybody have solid info on this subject? To me that is the issue, the rest is the usual piling on, on failures. If they really have something different then they have a chance. That would be one big reason for a third party buyer to act. Before talking break up value which is easy to calculate I would want to know if technically they have any arrows in their quiver.

  • Report this Comment On December 21, 2011, at 1:45 PM, drfool21 wrote:

    QNX technology is definitely reason to consider hope for RIM's future. Bigger, stronger & faster in most cases is usually better right? Not to mention, in RIM's case--this will also be receptive for the Android market (eliminating most complaints about "not enough apps" crowd).

    -flash capable

    -smoother multi-tasking of apps simultaneously

    I don't know. I'm interested.

  • Report this Comment On December 21, 2011, at 2:33 PM, chopchop0 wrote:

    RIMM = The Palm of 2012 and the EK of smartphones.

    Palm was sold for 1.2 billion. RIMM has a little farther to fall

  • Report this Comment On January 18, 2012, at 10:27 PM, maxmz01 wrote:

    RIM has strange culture and self distruct political environment.

    In RIM if a new hired person figure out major problem and introduce efficient approach, both manager and his buddy group member will proof their wrong approach works. just like someone point out driving a car is right way, pushing a car is wrong way, then both manager and his buddy group member will hate you, and proof that 3 person can also move the car by pushing it. cheating email will be sent to some vice president, saying like: see, the car moving, pushing a car is a natural part of the process, in order to deny new hired contribution of introducing skill of drive a car, they have to deny merit of driving a car.

    It is very strange company culture and strange company political environment, it promote stealing and cheating skill. RIM's management may be a typical instance in MBA course.

    This culture deny or steal hardworking team members' contribution/innovation, generate strange political environment, destroy RIM.

  • Report this Comment On May 18, 2012, at 11:08 AM, infektu wrote:

    Your spiteful tone vs. RIM undermines any credibility your points might have.

    Listening to you it seems like RIM is responsible for global warming, in addition to all the bad things that happened to you over the last decade.

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