Facebook Isn't Buying RIM, OK?

Facebook hasn't even gone public, and already outsiders are trying to spend its billions.

"Speculation intensifies that it already has a major acquisition in mind," Geoff Foster of U.K.'s Daily Mail writes. "Step forward, struggling BlackBerry smartphone maker Research In Motion."

This is sheer lunacy, of course. Facebook's stock would tumble if it acquired the decaying Research In Motion (Nasdaq: RIMM  ) . Even if RIM handed itself over to Mark Zuckerberg for free, the price of freshly minted shares of Facebook would fall like leaves.

The same article speculates that Facebook may have to enter a bidding war with Vodafone (Nasdaq: VOD  ) for RIM. 

Wow. A fading smartphone pioneer -- that will most likely die an old maid -- is now the belle of the buyout ball?

Don't believe it. I wouldn't put it past Vodafone to make a play for RIM. It has an eclectic enough portfolio of global telecom properties that buying RIM in the single digits may make sense. There's just no way Facebook would get involved.

And it's not just about what this would do to Facebook's stock. Buying RIM would simply be a terrible business move. We live in a mobile world, and Facebook's global success has been largely the result of its app popularity on Google (Nasdaq: GOOG  ) Android and Apple (Nasdaq: AAPL  ) iOS devices. If Facebook snapped up RIM, it would make Facebook seem less mobile operating system-agnostic.

How would Google take it, especially now that it's already battling Facebook with Google+? Why would Apple not roll out a social network of its own if it sees that two platforms are tethered to BlackBerry and Android?

Zuckerberg has made a few questionable moves -- paying $1 billion for Instagram, for starters. However, he's smart enough not to sabotage his stock and his company with a destructive buyout. He'd be wearing a hoodie just to hide from investors if he ever tried to pull that off.

Face the music
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The Motley Fool owns shares of Google and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Google, and Vodafone Group, as well as creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He owns no shares in any of the stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (9) | Recommend This Article (9)

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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 May 17, 2012, at 11:18 PM, goldozone wrote:

    ^^ Natural Gas running cars are already being used in other parts of the world for around $2.00 a gallon.

  • Report this Comment On May 17, 2012, at 11:58 PM, applefan1 wrote:

    Facebook buying RIM. GO FOR IT!!!

  • Report this Comment On May 18, 2012, at 12:08 AM, ipatricktrevino wrote:

    Facebook has two main agendas: 1) Mobile. 2) China. There's a clear answer and acquisition that would kill both birds with one stone. ...or should I say tablet.

  • Report this Comment On May 18, 2012, at 12:17 AM, IlluminatInvest wrote:

    That's probably why they bought Instagram before going public, so the market wouldn't crucify them.

    But wouldn't they consider buying Zynga with their sure to be inflated stock, at least they make money.

  • Report this Comment On May 18, 2012, at 5:25 AM, criticalfool wrote:

    Why pollute this world with such useless trash? You have no idea what RIM is or what facebook can do with RIM.

  • Report this Comment On May 18, 2012, at 5:33 AM, garifolle wrote:

    Come on, your might have a fantastic crystal ball, but name me one who would not take RIM for free!

    But we do not know (at least I don't), what FB agenda is, but it sure must offer new incentives, because lots of share holder intend to sell big percentages of their holdings today!

    Disclosure : long on RIM short on FB (Joke)

  • Report this Comment On May 18, 2012, at 9:01 AM, asdf222 wrote:

    Just as Mark looking like the 29th richest man on earth - ahead of Google's founders - is up there with "Nero fiddling," I think one has to recognize that while Microsoft and Apple have sat on mountains of cash without doing something stupid -

    1) That's tougher than it looks - more often than not, the investment bankers DO earn their bones by getting something to fly. It wasn't just in 1999 either, and it isn't all insane - the argument about jeopardizing your ecosystem by getting into bed with someone in your foodchain can be refuted without that much effort. (Check Amazon & Kindle)

    2) FB really WILL have trouble deploying its cash hoarde even arguably sensibly.

    Still, I think the article is sound, PRECISELY because of the effect it would have on the stock price. The 10,000 new millionaires probably are NOT in a hurry to be former millionaires.

    --

    But the folks who heaped abuse on the author have a point too - even with a likely premium (at this point), making a RIM buyout more likely to happen in the 15-20 range, SOMEbody is likely to step up to the plate. More likely, IMHO, several players will carve it up.

  • Report this Comment On May 18, 2012, at 11:05 AM, infektu wrote:

    "Why would Apple not roll out a social network of its own if it sees that two platforms are tethered to BlackBerry and Android?"

    Indeed, why not?

    For the same reason why they don't do it now.

    Outsiders maybe trying to spend FB's billions, while the author assigns Apple infinite power...

  • Report this Comment On May 21, 2012, at 8:01 AM, tonyrenier wrote:

    First off, Facebook seems to be a lead balloon.

    Second, the most privacy invading website buying the most secure Mobile Device with it's huge secure network is ludicrous.

    Apple and Google have been unwilling to invest in the infrastructure RIM has put in place to protect data. Android is already being compromised by keystroke loggers embedded in their apps.

    RIM vetts each and every app and if they miss something it will hit their server before going any further.

    People complained about last fall's outage. That will never happen with Apple or Android because they don't have their own servers to sort legit from dubious data.

    What are you smoking?

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