Only Fools Rush In...to RIM (RIMM)
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It's no secret Research In Motion (Nasdaq: RIMM) has been under pressure the last few years as it failed time and again to read market signals calling for an evolution of mobile devices and the ecosystems they're tethered to. With shares now below $13, valuation is seemingly rock bottom. But valuation alone -- at this point -- might not be enough to lure potential buyers.
According to data from Bloomberg, RIM shares currently trade at 0.68 times assets less liabilities, compared with 2.3 times for its peers. Free cash flow and its $1.16 billion in net income over the last 12 months also add to the value. An acquirer could pay a 41 premium to RIM's current stock price and still snag the company at a discount relative to peers (paying $18.30 or so would still value RIM at 6 times 2011 earnings).
What are buyers waiting for then?
While several overhangs loom ominously over the company and shareholders (expected declines in sales and net income for 2012, to name just one), RIM's next-generation operating system, BlackBerry 10 (BB10), will need to gain some traction before companies even start considering a kicking of the tires on RIM.
One name that might pique some investor interest is Amazon.com (Nasdaq: AMZN). With the introduction of its Kindle series of e-Readers, Amazon signaled the desire to do more in the consumer electronics arena. Acquiring RIM would give Amazon immediate exposure to several markets and a plethora of handset selections. The deal would also give Amazon an alternative operating system than Google's (Nasdaq: GOOG) Android. Many have chastised Amazon's Kindle Fire for its underwhelming performance while RIM's PlayBook is said to have an OS with plenty of potential, but poor execution.
As noted a few weeks ago, Korean OEM Samsung might be looking to partner with RIM for its OS capacity. Samsung currently makes stellar mobile handsets but relies on Android and Microsoft's (Nasdaq: MSFT) Windows Phone OS for the function of its devices.
Then there's always Taiwan-based HTC. Similar to Samsung, HTC relies on licensing an OS or two to make its devices more appealing. The company has seen much success over the last two years as Android has gained more and more attention.
With Google, there's the potential risk to the aforementioned companies should its proposed acquisition of Motorola Mobility (NYSE: MMI) close. In that case, licensing fees could go up as Google looks to make its ecosystem a little more exclusive, chomping away at margins in the process.
But it all rests on BB10. And buyers have no reason to make any rash decisions; RIM is still slated to turn a profit in 2012.
Following a 9.5 percent drop Tuesday, RIM is looking like it could start off Wednesday lower as well. The stock last traded at $12.76.
According to data from Bloomberg, RIM shares currently trade at 0.68 times assets less liabilities, compared with 2.3 times for its peers. Free cash flow and its $1.16 billion in net income over the last 12 months also add to the value. An acquirer could pay a 41 premium to RIM's current stock price and still snag the company at a discount relative to peers (paying $18.30 or so would still value RIM at 6 times 2011 earnings).
What are buyers waiting for then?
While several overhangs loom ominously over the company and shareholders (expected declines in sales and net income for 2012, to name just one), RIM's next-generation operating system, BlackBerry 10 (BB10), will need to gain some traction before companies even start considering a kicking of the tires on RIM.
One name that might pique some investor interest is Amazon.com (Nasdaq: AMZN). With the introduction of its Kindle series of e-Readers, Amazon signaled the desire to do more in the consumer electronics arena. Acquiring RIM would give Amazon immediate exposure to several markets and a plethora of handset selections. The deal would also give Amazon an alternative operating system than Google's (Nasdaq: GOOG) Android. Many have chastised Amazon's Kindle Fire for its underwhelming performance while RIM's PlayBook is said to have an OS with plenty of potential, but poor execution.
As noted a few weeks ago, Korean OEM Samsung might be looking to partner with RIM for its OS capacity. Samsung currently makes stellar mobile handsets but relies on Android and Microsoft's (Nasdaq: MSFT) Windows Phone OS for the function of its devices.
Then there's always Taiwan-based HTC. Similar to Samsung, HTC relies on licensing an OS or two to make its devices more appealing. The company has seen much success over the last two years as Android has gained more and more attention.
With Google, there's the potential risk to the aforementioned companies should its proposed acquisition of Motorola Mobility (NYSE: MMI) close. In that case, licensing fees could go up as Google looks to make its ecosystem a little more exclusive, chomping away at margins in the process.
But it all rests on BB10. And buyers have no reason to make any rash decisions; RIM is still slated to turn a profit in 2012.
Following a 9.5 percent drop Tuesday, RIM is looking like it could start off Wednesday lower as well. The stock last traded at $12.76.
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