Despite Research In Motion’s (RIMM) leadership role in the market for handheld communication devices, the co’s rapidly deteriorating market value may leave the BlackBerry developer, according to Reuters, quite vulnerable as a takeover target from well-capitalized buyers such as Microsoft (MSFT).
Shares of Waterloo, Ontario-based RIM have declined from $148 to $55 in four months as result of the U.S. financial crisis and margin pressures the co. is experiencing because of expenses mostly related to its latest high-end model BlackBerry Bold.
Like Apple (AAPL), RIM offers not just the hardware but also develops its own software and services using C++, C and Java technology that run on top of its devices. The co. also develops and sells embedded wireless data components.
The speculation is that as some of RIM’s large corporate clients start scaling back BlackBerry purchases and upgrades as the economic downturn takes hold, hurting directly the co’s performance and its revenues — RIM shares will further deteriorate, consequently loosing more value. Once the stock gets near the $40 levels, Microsoft at that point might bid the co. for $50 a share, or $28 billion.
Canaccord Adams analyst Peter Misek thinks that RIM is “a massive strategic fit for Microsoft. I’m fairly certain, he said, they have a standing offer to buy them at $50 a share.”
Rumors of Microsoft’s, interest in RIM have swirled in the past, notes Reuters – but no deal has ever materialized. However, if a buyout takes place, and Microsoft has the balance-sheet strength to do such a deal, it would give the Redmond, Washington-based co. a formidable wireless-handset presence through access to RIM’s nearly twenty million BlackBerry subscribers.
RIM currently has a $31.2 billion market cap and a solid 29% operating margin.