With Research In Motion stock in freefall from a high of $148 on the Nasdaq just four months ago to its present sub-$60 valuation, rumors are circulating the handset maker may soon find itself the target of a takeover bid by Microsoft. Speaking to Reuters, Canaccord Adams analyst Peter Misek argues that "RIM is a massive strategic fit" for Microsoft, adding "I'm fairly certain they have a standing offer to buy them at $50 [a share]." The argument in favor of a Microsoft/RIM deal is that acquiring the BlackBerry product portfolio would enable Microsoft to compete head-to-head with mortal enemy Google as the web services giant enters the mobile device market with the HTC-produced G1, the first commercial handset based on Google's Android mobile OS. Moreover, Microsoft boasts the balance-sheet strength to cut such a deal, with $23.6 billion in cash, cash equivalents and short-term investments as of June 30. Combine that with an equity component, and Microsoft could avoid the debt markets in financing a bid.
But as Wired points out, entering the hardware market would force Microsoft into direct competition with its current Windows Mobile manufacturer partners--according to Research Capital analyst Nick Agostino, it doesn't make any more sense for Microsoft to acquire RIM to strip the company of its hardware to focus on the OS, either. Instead, Agostino believes Microsoft may be interested solely in RIM's email application, and says RIM is far better off toughing out the economic downturn on its own. "They're only now starting to tap the consumer market," he said. "If they truly believe that their onslaught of new devices has potential to shift gears into even higher growth I would say that a $50 offer is way too low."
It's also worth noting that while speaking at a recent Churchill Club event in Santa Clara, Calif., Microsoft CEO Steve Ballmer predicted RIM and its smartphone brethren Nokia and Apple will all falter as the market expands because those companies tie their software so closely to their proprietary hardware. In other words, Ballmer argued, the same software licensing strategy that galvanized Microsoft's desktop dominance will apply to the smartphone hierarchy, with the real battle for supremacy taking place between Symbian, mobile Linux and Windows Mobile.
For more on the Microsoft/RIM rumors:
-read this IntoMobile article
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