After RIM’s latest train-wreck of a quarter, the clobbered BlackBerry-maker has announced that it is “exploring strategic options.”That’s code for “We’re desperately trying to sell ourselves.”
And that’s a good plan.
At this point, there’s almost no foreseeable way for RIM to make a comeback. Their products have been leap-frogged by Apple and Google, they have a small and shrinking proprietary platform (operating system), and the distinction between the “enterprise market”–RIM’s former stronghold–and the “consumer market” is disappearing.
So, the questions are…
Who might want to buy RIM?
What might they be willing to pay for it?
Let’s take the “who” question first. We’ll come back to the “how much” later.
Here are 7 companies that might want to buy RIM. There are several others that might be dumb bold enough t do it, but these are some that leap to mind.
Samsung, HTC, LG, Motorola (Google), or Nokia: All of these smartphone makers are struggling for dominance in a fragmented market with low profit margins. In markets with low profit margins, especially “platform” markets like smartphones, market-share is a competitive advantage. All of these companies might look at RIM’s meaningful but dwindling share of the global smartphone market and conclude that it made sense to own.
Microsoft: Microsoft is about to throw a Hail Mary pass in the mobile market in the form of the new Windows Phone 7. Microsoft is nowhere in mobile. Owning RIM would not give Microsoft a commanding position in the market, by any means, but it would put it somewhere in the market. Also, RIM is strong in the enterprise, which is where Microsoft is strong. The combination of Microsoft and RIM might be able to argue persuasively that they’re a better choice for corporations than Apple or Android.
Facebook. Go ahead and laugh. Facebook’s working on its own Facebook phone. It needs this because Apple and Google currently control the gateways with which hundreds of millions (soon to be billions) of Internet users will access Facebook. Facebook is also about to have a market capitalisation of ~$100 billion. Facebook might conclude that RIM’s expertise and distribution would be nice things to own.
Amazon. Amazon already makes its own tablet–the Kindle Fire. Lots of people think Amazon will soon make its own smartphones. Amazon doesn’t care about building the state-of-the-art tablets. It just wants to make affordable tablets and smartphones aimed at the mass consumer market, gadgets that consumers can use to buy stuff from Amazon. Like any other acquirer, Amazon might want to blow up RIM’s proprietary platform and replace it with Android or Windows, but RIM’s gadget expertise and distribution expertise might be helpful.
Dell, HP, Acer, and other PC manufacturers who are getting absolutely clobbered because they’re not making hit smartphones and tablets. All of these companies might view RIM as a way of leap-frogging into these businesses.
Intel. Intel has announced that it is going to make smartphones (in fact, it has already made some). Intel has pots and pots of cash and is hunting around for things to spend it on. We think Intel would be nuts to go into the making-smartphones-and-tablets business, but Intel apparently doesn’t think so. So Intel might also buy RIM.
So that’s 11 companies that might want to buy RIM.
And there are two other reasons why these companies (and others) might want to buy RIM.
First, RIM owns patents. Patents are being viewed as valuable these days. And patents are especially useful and valuable in the mobile market right now, if only as a way to extort money out of your competitors. One of the big non-Apple smartphone vendors might like to own those patents.
Second, RIM has $2 billion of cash and is still highly profitable. Yes, RIM’s business will continue to crater, but it will be a long time before RIM stops generating cash. In fact, in the last quarter, RIM generated more than $600 million of cash. If someone bought RIM and stopped some of the dumb investments the company is probably making, it could presumably wring a ton of cash out of the company before it collapses. So there’s even a financial reason to own it.
So, we imagine that the bankers helping RIM “explore strategic alternatives” will have lots of folks interested in seeing the pitch-book. And the threat that a competitor will buy it will probably goad lots of these folks to actually consider doing it.
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