Google's (NASDAQ:GOOG) proposed $12.5 billion acquisition of Motorola Mobility (NYSE:MMI) has stoked speculation about which companies will be acquired next--and that speculation has centered on Nokia (NYSE:NOK) and Research In Motion (NASDAQ:RIMM).
However, despite a jump in their respective share prices on acquisition speculation, analysts do not think that either Nokia or RIM is a likely takeover target in the near term. The reason? The most likely buyer--Microsoft (NASDAQ:MSFT)--is coming out as a winner from the Google/Motorola deal and does not have a reason to be a suitor.
"This is a big win for Microsoft," said Current Analysis analyst Avi Greengart. "Competing with your licensees is something that no company has been able to pull off, so Google is putting itself in a tight spot."
If Google's purchase of Motorola is approved by regulators, Microsoft would stand alone as the only mobile company that is not vertically integrated with its hardware and software. And Microsoft knows it: "Investing in a broad and truly open ecosystem is important for the industry and consumers alike, and Windows Phone is now the only platform that provides equal footing for all partners," said Andy Lees, president of Microsoft's Windows Phone division.
Greengart said a Microsoft acquisition of Nokia or RIM would be disastrous. "I think strategically it would possibly be the dumbest thing Microsoft could ever do in this situation," he said. "If Microsoft buys Nokia, they will be competing with their licensees."
ABI Research analyst Kevin Burden said he thinks Microsoft now has an opportunity to deepen its relationship with its licensees, especially HTC, LG and Samsung, which have bet heavily on Android.
And what about RIM? Burden said he thinks RIM will remain a standalone company because it believes in its vertically integrated approach and its transition to using QNX software for its smartphones. "RIM feels like QNX is their savior," he said. "They feel that if they can get that down to the devices, all of the complaints that anyone has with the devices will go away. That's holding them back from looking for a suitor." A RIM spokeswoman declined to comment.
CCS Insight analyst John Jackson said he does not think Nokia or RIM will be takeover targets in the near term, but that could change if the companies' valuations fall. "In the near term, it [the Google-Motorola deal] doesn't carry any implication for either of these guys," he said. "Having said that, the market is nothing if not fluid, and we're in a period of profound tectonic shifts. I also think nothing is off the table."
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