Last night RIM CEO Thorsten Heins said he was “undertaking a comprehensive review of strategic opportunities.”That got everyone thinking that RIM might finally be willing to sell itself to the highest bidder.
Who would want RIM? And what would they be getting. We break it all down.
How much will it cost to buy RIM?
RIM’s enterprise value is $5 billion. The fair price for a dying company like RIM is $4 billion. But it wouldn’t sell for that.
To get RIM today means paying $7-$10 billion.
So, any company thinking about buying RIM should just wait?
What do you get if you buy RIM?
A dying company in extreme turmoil.
Sounds like a great deal …It’s not all bad. Pierre Ferragu at Bernstein argues that RIM could be worth $20 billion to the right buyer. He estimates RIM’s patent portfolio is worth $2 billion, services is worth $7 billion, and the user base is worth $11 billion.
So, it’s really worth $20 billion?
Probably not. This is just one guy’s wildly optimistic valuation. In fact, he’s saying it’s worth $20 billion to HTC, specifically.
Ah. So HTC should buy RIM for $10 billion and get a great deal?
Arguably. But we’re not sure it’s a good fit. HTC is all in with Android. That was working until it wasn’t. Samsung is now the number one Android seller. HTC could buy RIM and try to transition its still large user base to HTC. Or it could spend that $10 billion on forking Android and building its own operating system like Amazon and try to differentiate itself from Samsung. We think that’s a smarter use of $10 billion.
What about Microsoft, then? Everyone thinks Microsoft is a good fit, right?
Three years ago, maybe. Today, Microsoft has a good partner with Nokia, and a good operating system with Windows Phone 7. What does it get from RIM? A company that’s still strong in corporations, and an opportunity to quickly increase market share. We think this is a mistake. Microsoft is starting to a get a little mojo going. The last thing it wants to do is take on a dying Canadian hardware company.
Oy. Is anyone a good fit for RIM?
Honestly, we don’t think so. This is a company that is dying and in a state of transition. It runs on its own platform. Most hardware makers have picked their partners for software. Transitioning to RIM’s software doesn’t make sense unless RIM’s next software is awesome. In which case, another hardware maker like Dell or LG could buy RIM and use BlackBerry 10.
But, that’s sort of silly for RIM, right? They wouldn’t want to sell if the software is good.
Exactly. What’s the point? RIM could turn itself around without help.
But that’s pretty unlikely, right?
So that’s it for RIM? Make great software or die?
Pretty much. It’s possible someone wild card jumps in. Maybe a carrier takes a chance on RIM if it gets cheap enough, or maybe a Chinese phone maker buys the company to get a nice entry into North America, or maybe a PE firm looks at RIM’s still impressive cash flow and decides to take the company out and try to fix it.