Analysts: RIM's tumbling value makes sale unlikely

Research In Motion (NASDAQ:RIMM) conceded Thursday that it was exploring "strategic opportunities," including partnerships, joint ventures, licensing BlackBerry 10 or even a possible sale of the company. However, analysts seem to think that any sale of the BlackBerry maker, in whole or in part, is unlikely at this point.

To be clear, RIM's stated strategic priority is the launch later this year of BlackBerry 10, its new smartphone operating system, which the company hopes will help reverse its declining fortunes. "We would consider it [a sale of the company], but it is not the main direction we're taking now," RIM CEO Thorsten Heins said on the company's earnings conference call, where RIM reported a $125 million net loss, its first in seven years.

Brian Blair, an analyst at Wedge Securities, wrote in a recent research note that he did not see a deal for RIM in the near term "because we don't believe RIM has much to offer." Blair does not think that RIM's hardware or software businesses, or even its secure server network, would fetch much money, and certainly not as much as RIM may have received a year ago. RIM's current market valuation is $7.3 billion, but due to a 74 percent slide in its stock in the past 12 months that's down from a value of $29.4 billion a year ago.

Multiple reports in late 2011 indicated that as well as a joint team of Microsoft (NASDAQ:MSFT) and Nokia (NYSE:NOK)  considered takeover bids for RIM, but no formal offers were made. Samsung has also been rumored as a company that might license BlackBerry software, but both RIM and Samsung have declined to comment on the rumors. 

RIM could also sell its patent portfolio. RIM was part of a consortium of companies that snapped up Nortel Networks' patents for $4.5 billion, so the firm clearly knows the value of intellectual property. However, according to the New York Times, analysts at Jefferies wrote last fall that RIM's portfolio might only get $2.5 billion in a sale, and if RIM continued to make BlackBerry devices and needed a cross-licensing deal, the value of those patents might only be $1 billion.

If RIM did decide to sell, the Canadian government has said it will not block the sale. In the past Canada's government has blocked foreign takeovers to companies deemed vital to Canada's interests. Federal Finance Minister Jim Flaherty told Friday that the government would not block any foreign takeover of RIM, saying that "they will be the masters of their own destiny."

Financial analysts are pessimistic about the company's prospects for the next several quarters. "RIM appears to be pinning its hopes on its new QNX operating system, which will power its BlackBerry 10 line of smartphones due out sometime in the second half of the year," Needham analyst Charlie Wolf wrote in a research note. "But we think it's an open question whether BlackBerry 10 can save the day. QNX, which runs on the Playbook, did not save the Playbook's day."

For more:
- see this NYT blog post
- see this CBC article
- see this AllThingsD article

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