RIM job cuts renew takeover speculation

But who would buy troubled BlackBerry maker, and why?

The stock price for BlackBerry maker Research in Motion dropped $1.24 in heavy trading Monday, to $26.67, and even more after hours, to its lowest point in five years. That makes the stock a bargain for a buyer, but there's one problem with the renewed talk of a RIM takeover:

Who would buy it? And why?

Will RIM survive?

"Once you take Microsoft off the table, there really isn't anyone else," says Chris Antlitz, analyst, networking and mobility practice, Technology Business Research, a market researcher in Hampton, N.H. "RIM still has a market valuation of $14 billion. Figure a premium to bring it to a minimum $17-18 billion price tag, and not many companies can afford that."

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The stock price for BlackBerry maker Research in Motion dropped $1.24 in heavy trading Monday, to $26.67, and even more after hours, to its lowest point in five years. That makes the stock a bargain for a buyer, but there's one problem with the renewed talk of a RIM takeover:

Who would buy it? And why?

Will RIM survive?

"Once you take Microsoft off the table, there really isn't anyone else," says Chris Antlitz, analyst, networking and mobility practice, Technology Business Research, a market researcher in Hampton, N.H. "RIM still has a market valuation of $14 billion. Figure a premium to bring it to a minimum $17-18 billion price tag, and not many companies can afford that."

The stock drop, more than 4%, was the market's reaction to RIM's announcement that it would lay off 2,000 workers, about 11% of its workforce. But the move was widely regarded by analysts as at best a temporary adjustment that didn't address the real problem: RIM's difficulty in coming up with innovative, best-selling mobile products, hardware and software, that can compete more effectively against Apple and a rising tide of handset makers betting on an Google's Android operating system.

RIM's PRECIPITOUS FALL: Timeline: RIM's rapid decline

For more than a year, there's been speculation that Microsoft might acquire RIM because both rely heavily on, and are strong in, the enterprise market. TBR's Antlitz also thought Microsoft could leverage RIM's client-server software platform to sell a range of new cloud services.

But Microsoft's deal with Nokia, in which Nokia scuttled its internal mobile OS plans for smartphones in favor of Microsoft's Windows Phone 7, makes a RIM buy much less compelling for Microsoft, Antlitz says [see "Both Nokia, Microsoft have much to gain, and lose, in mobile deal"].

"Microsoft now is more likely to buy Nokia than RIM, simply because of how they are now," he says. "Microsoft could pay a few more billion for Nokia than for RIM, but they'd be getting more bang for the buck. I want to emphasize that is not a probable acquisition."

That doesn't leave many candidates, he says. Chinese handset makers ZTE and Huawei might be possibilities, especially as Nokia has long dominated the China market. "I don't see that," Antlitz says. "These two companies are all in with Android, and they're targeting the $150-or-less smartphone market."

HP, IBM and even Cisco have the size and money to buy RIM, but not a strategic need to do so, Antlitz says. HP bought Palm last year for $1.2 billion, and is determined to make Palm's webOS a strategic mobile success [See "Q&A on HP's buyout of Palm"]. IBM is "more about services and ecosystems," he says.

"We don't see anyone with a grand plan to leverage the RIM platform and its installed base, beyond just selling handsets," Antlitz says.

And the depressed stock price doesn't change those strategic realities. In late June and early July there was already renewed talk of RIM's stock being a bargain. "In 2008, RIM had a market capitalization in excess of $80 billion, making it the most valuable Canadian company by stock value. This figure has now dropped to a paltry $15.12 billion as of today," noted one published analysis.