Microsoft Rumored to Be Eyeing RIM
Microsoft Corp. (Nasdaq: MSFT)'s rumored interest in acquiring BlackBerry would instantly give the software giant a larger share in the consumer and enterprise smartphone market, while bringing in technology that could help stave off new challengers in the market, such as Apple Inc. (Nasdaq: AAPL) and Google (Nasdaq: GOOG).
Rumors of a Microsoft takeover are linked to the precipitous fall in the Canadian device maker's share price over the last few months. The company's shares stood at nearly $150 during the summer but have been forced down by the global financial crisis and fears of the effect that could have on RIM's business.
The speculation boosted RIM's shares for the day, up $8.59, or 15.54 percent, to $63.87.
Reuters quoted Canaccord Adams Inc. analyst Peter Misek saying that Microsoft could make a $28 billion bid for the firm if the stock prices continue to fall. "I'm fairly certain they have a standing offer to buy them at $50 [a share]," the analyst reportedly said.
"You can't completely dismiss rumors like this," suggests Carmi Levy at AR Communications Inc. "Certainly the crash in RIM's share value has made them a more attractive target."
He suggests that such an acquisition may be a better strategic fit than the much-ballyhooed Microsoft/Yahoo Inc. (Nasdaq: YHOO) deal. "Microsoft does not have an iPhone-killer strategy. It does not have a Google Android strategy. Buying RIM would give them that."
Nokia Corp. (NYSE: NOK) is still No. 1 in the global smartphone market with more than 40 percent share. RIM stands at No. 2 with more than 13 percent, while Apple comes in third with more than 5 percent of the market.
Levy suggests that -- particularly in North America -- Nokia has failed to capitalize on its leading position with new smartphone models. Thus, in the U.S., market share tussles are among RIM, Apple, and devices based on Microsoft's Windows platform.
Google is the unknown factor, although interest in its initial Android-based phone, the High Tech Computer Corp. (HTC) (Taiwan: 2498) G1, suggests it could be a strong seller when launched later this month.
Meanwhile, Levy cautions that some of these Microsoft rumors have been floating around RIM for a while. "Certainly we heard it in August last year, when the shares were around $90 each."
Even the possibility of Cisco Systems Inc. (Nasdaq: CSCO) taking a stake in RIM traveled the rumor mill last month, although that has been largely dismissed by industry watchers. "I just couldn't wrap my head around that one," Levy comments.
RIM and Microsoft haven't yet replied to calls about the M&A talk.
— Dan Jones, Site Editor, Unstrung