It's hunting season for Openwave (Nasdaq: OPWV). The cell-phone software specialist is hiring Merrill Lynch (NYSE: MER) to seek out "strategic alternatives" -- corporatespeak for "please buy me" -- in hopes of ending its shareholders' misery.
Openwave's luck has been running dry since it became one of several dozen companies snagged in the stock-option backdating epidemic. Financial restatements, class action lawsuits, and a flurry of executive resignations have followed. It doesn't help that profits have turned to losses, and sales have been shrinking.
In the corporate equivalent of a hockey team taking out the goalie for a last-ditch attempt at scoring, Openwave is leaving an open net by also announcing the resignation of its CEO. A seasoned executive who cut his teeth at Lucent will be taking over the helm, but that'll likely only be temporary, until a buyer steps in for the easy score.
Who will buy it? The company has an impressive client list. It would be easy to see Motorola (NYSE: MOT), Cingular, or Sprint Nextel (NYSE: S) want in, though being snapped up by one may endanger Openwave's business relationship with the others. A platform partner like Qualcomm (Nasdaq: QCOM) may make more sense, though the company's dirty laundry and cheap price may make it more attractive to a private equity firm that can clean the sheets without public scrutiny.
It's a shame to see Openwave sell out. Motley Fool Rule Breakers recommended it in fall 2005, as the company's open-standard software grew increasingly popular in wireless handsets, wireline carriers, broadband, and even instant messaging. Alas, the company's shares have fallen 50% since. That's the price you pay for swinging for the fences with growth stocks: You're going to strike out now and then.
Openwave continues to strike deals, roll out innovative offerings, and even repurchase shares, but it's time to give someone else a swing at the plate. Better luck in better hands, Openwave.
Despite Openwave's tumble,
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Longtime Fool contributor Rick Munarriz doesn't carry a hunting license for Openwave hunting season. He does not own shares in any of the companies in this story. He is also part of the
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