Research In Motion Ltd. (RIMM) has lost so much value that an acquirer could pay a 50 percent premium and still buy the BlackBerry maker for a lower multiple than any company in the industry.
RIM, once worth $83 billion, fell more than 80 percent from its record three years ago as Apple Inc. (AAPL)’s iPhone and Google Inc. (GOOG)’s Android platform siphoned off smartphone customers. The Waterloo, Ontario-based company, which plunged last week after saying quarterly sales may drop for the first time in nine years, closed yesterday at $25.89 a share, or 4.7 times earnings next year. That’s less than any communications-equipment provider, according to data compiled by Bloomberg.
While Jim Balsillie and Mike Lazaridis, RIM’s co-chief executive officers, said last week that their commitment to RIM is “stronger than ever,” the company may now attract Microsoft Corp. (MSFT) and Dell Inc. (DELL), BMO Harris Private Banking said. A buyer would get a smartphone maker that is still dominant among corporate clients, offers greater security with its own e-mail servers and generates more free cash versus its market value than any of its rivals. Paying $40 a share still values RIM at a discount to comparable companies in the industry.
Full Story: RIM’s Plunge May Beckon Microsoft, Dell