Research In Motion’s stock has been so clobbered that going short doesn’t make any sense now, says Bernstein analyst Pierre Ferragu.
In a report titled, “Too Good to Be True; Activist and Takeover Upside Risks Now Material,” he upgraded the stock from underperform to “market perform,” which isn’t exactly a huge vote of confidence. In fact, he says, “We do not recommend buying the stock.”
However, if you’re holding onto the stock here’s what you should be looking at. (Our thoughts are in parenthesis):
- Shareholder activists could cause a change in management, or even cause a takeover. (This isn’t something to bet on. Jim Balsillie and Mike Lazaridis own 10% of the company. Shareholders can’t do much. And even if they could, who are they going to bring in?)
- RIM is valued at just ~$120 per user. At such a cheap price per user, Ferragu thinks Microsoft or HTC could buy the company and offer replacement handsets to existing users to get them to upgrade on a different OS. (Doesn’t this sound needlessly complex and messy? For $10 billion just hand out phones to people.)
- RIM spent $3.7 billion on intangible assets like patents — that has to be worth something to someone, right?
- Maybe RIM tries out Android and radically changes its strategy?
For what it’s worth, we think this is all totally wrong and over thought. We think RIM goes all in with QNX. And if it somehow works — a miracle considering it has to beat iOS, Android, and Windows Phone — then RIM’s stock soars. If It flops, which is likely, the stock will crater further, and the company becomes the new Palm, getting sold for $1-$3 billion.
Anyway, here’s a chart Ferragu made up to show how much RIM could be worth to HTC. If HTC actually spends this much for RIM it’s nuts.
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