Should RIM Buy Handspring?

Handspring Inc. COO Ed Colligan told the Toronto Star on Friday that he thinks it's a "good idea" to make email software from Research In Motion Ltd. (RIM) (Nasdaq: RIMM; Toronto: RIM) compatible with his firm's Treo PDA phone and other devices running the Palm OS.

Even though the two companies are generally seen as rivals – and have just settled a legal scuffle over patents – the possibility of a partnership isn't as far-fetched as it would once have been. After all, RIM has already licensed some of its software to another device rival, Nokia Corp. (NYSE: NOK), and says that it wants to do more of these kind of deals (see RIM's Big Score).

But why stop there? asks Seamus McAteer, principal analyst with the Zelos Group LLC. "Why doesn't RIM just buy Handspring?" he asks, somewhat rhetorically.

"Yeah, why not?" Seamus continues, warming to his theme. "Buying Handspring would give [RIM] a GSM/GPRS product…"

But RIM already has a GPRS device.

"They've probably done no more than 10,000 units," McAteer claims.

Handspring has both GPRS and CDMA 1xRTT variants of its Treo device. Most of the BlackBerry devices that RIM has sold actually run over pager networks. The company has recently introduced GPRS and iDEN variants of its devices.

"With Handspring, there's a brand there, and it gives RIM a CDMA channel and a relationship with Sprint PCS (NYSE: PCS)," McAteer continues.

RIM certainly has the money to buy the struggling handheld maker. RIM has a current market cap of around $1.13 billion and $350.7 million cash in the bank. Handspring has a market cap of $160.9 million.

"It could happen," concludes McAteer with a flourish. "We're in a new age of pragmatism." — Dan Jones, Senior Editor, Unstrung
Be the first to post a comment regarding this story.
Sign In