Activist Investors in Research In Motion (RIMM) Should Hold Off, Or Move On - Analyst
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Price: $14.64 +12.36%
Rating Summary:
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Today's Overall Ratings:
Up: 13 | Down: 28 | New: 14
Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 28 | New: 14
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Are you an activist investor in Research In Motion Ltd. (NASDAQ: RIMM)? Then you should pause, according to one analyst Wednesday.
Jefferies' analyst Peter Misek warned that RIMM will be very hard to turnaround and activists should wait at least 6-month, or until the QNX transition and Windows 8 launch, before even trying.
"We believe any potential acquirers will wait until the QNX transition is
completed as they will not know what they are buying otherwise," Misek said. "Also, we believe acquirers will wait to see if Windows 8 becomes the third mobile ecosystem as its success or failure will dramatically alter the strategic situation and RIM's valuation."
Even in a break-up or management change scenario value will be difficult to extract, he warns.
"While investors are very frustrated with Jim and Mike we cannot think of anyone who could take over as a transformational CEO who has significant software expertise and clout with both developers and carriers," Misek stated. He said no one at Apple is likely poachable. While Motorola Mobility's (NYSE: MMI) Sanjay Jha would be the best fit, he is highly regarded within Google (Nasdaq: GOOG) and more importantly his ties to QUALCOMM (Nasdaq: QCOM) make a move there far more likely. Android's Andy Rubin also appears unpoachable. That leaves someone at Microsoft (Nasdaq: MSFT) only remaining and a search through their current and past ranks does not lead to a conclusive answer.
Commenting on a likely acquisition, the firm notes that HP (NYSE: HPQ) would not be a suitor as it has struggled in mobile with WebOS. Dell (Nasdaq: DELL) would bring few synergies. A purchase by a carrier would be bold but likely destroy RIM's neutral status and severely limit the addressable market as other carriers pull away. An Asian suitor would also seem unlikely. "Samsung and HTC are likely too preoccupied with patent litigations to contemplate such a large purchase in the near term," Misek said. While Amazon (Nasdaq: AMZN) and Facebook makes some sense, the firms are seriously evaluating WebOS as an acquisition or partners. A move by these firms prior to QNX "makes no sense as all of Facebook's apps are becoming optimized on top of iOS and Android code bases and Amazon's existing tablets (based on Android) would be alienated." An acquisition by Microsoft (Nasdaq: MSFT) makes sense but the company has been able to the milk without buying the cow in its relationship with Nokia (NYSE: NOK). "It would take a failure there to cajole Microsoft into contemplating a RIM acquisition," he said.
The firm rates shares of RIM at Underperform, with a $21 price target.
For more ratings news on Research In Motion Ltd. click here and for the rating history of Research In Motion Ltd. click here.
Shares of Research In Motion Ltd. closed at $24.41 yesterday, with a 52 week range of $19.29-$70.54.
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Jefferies' analyst Peter Misek warned that RIMM will be very hard to turnaround and activists should wait at least 6-month, or until the QNX transition and Windows 8 launch, before even trying.
"We believe any potential acquirers will wait until the QNX transition is
completed as they will not know what they are buying otherwise," Misek said. "Also, we believe acquirers will wait to see if Windows 8 becomes the third mobile ecosystem as its success or failure will dramatically alter the strategic situation and RIM's valuation."
Even in a break-up or management change scenario value will be difficult to extract, he warns.
"While investors are very frustrated with Jim and Mike we cannot think of anyone who could take over as a transformational CEO who has significant software expertise and clout with both developers and carriers," Misek stated. He said no one at Apple is likely poachable. While Motorola Mobility's (NYSE: MMI) Sanjay Jha would be the best fit, he is highly regarded within Google (Nasdaq: GOOG) and more importantly his ties to QUALCOMM (Nasdaq: QCOM) make a move there far more likely. Android's Andy Rubin also appears unpoachable. That leaves someone at Microsoft (Nasdaq: MSFT) only remaining and a search through their current and past ranks does not lead to a conclusive answer.
Commenting on a likely acquisition, the firm notes that HP (NYSE: HPQ) would not be a suitor as it has struggled in mobile with WebOS. Dell (Nasdaq: DELL) would bring few synergies. A purchase by a carrier would be bold but likely destroy RIM's neutral status and severely limit the addressable market as other carriers pull away. An Asian suitor would also seem unlikely. "Samsung and HTC are likely too preoccupied with patent litigations to contemplate such a large purchase in the near term," Misek said. While Amazon (Nasdaq: AMZN) and Facebook makes some sense, the firms are seriously evaluating WebOS as an acquisition or partners. A move by these firms prior to QNX "makes no sense as all of Facebook's apps are becoming optimized on top of iOS and Android code bases and Amazon's existing tablets (based on Android) would be alienated." An acquisition by Microsoft (Nasdaq: MSFT) makes sense but the company has been able to the milk without buying the cow in its relationship with Nokia (NYSE: NOK). "It would take a failure there to cajole Microsoft into contemplating a RIM acquisition," he said.
The firm rates shares of RIM at Underperform, with a $21 price target.
For more ratings news on Research In Motion Ltd. click here and for the rating history of Research In Motion Ltd. click here.
Shares of Research In Motion Ltd. closed at $24.41 yesterday, with a 52 week range of $19.29-$70.54.
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