Nomura Securities First Look: Microsoft (MSFT) M&A - Skype, Yes. Research In Motion (RIMM) and Yahoo! (YHOO), No
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Up: 8 | Down: 5 | New: 26
Rating Summary:
58 Buy, 11 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities First Look: Microsoft Corporation (Nasdaq: MSFT) - Skype, Yes. Research In Motion (Nasdaq: RIMM) and Yahoo! (Nasdaq: YHOO), No
Nomura analyst, Rick Sherlund, said, "There have been various stories in the press that Microsoft (Buy-rated) may acquire Yahoo or RIMM, on which we wish to comment. First on RIMM, we do not see a compelling strategic fit and think this is unlikely. Second on Yahoo, we believe Microsoft has the benefit of scale in search through their current relationship with Yahoo and see no need to acquire the company. It is possible that Microsoft may be part of a larger group to invest in a minority position in Yahoo for some strategic business relationship, but this is very different than Microsoft buying Yahoo, that ship sailed by a few years ago and is unlikely, in our view, to be revisited given that Microsoft now has the scale they desired in search through their existing relationship with Yahoo. There are other parts of Yahoo that are likely of strategic interest to Microsoft, but there are likely smarter ways to work together than buying the company."
"On RIMM, running a simple merger model suggests it would be accretive to near-term earnings for Microsoft to buy RIMM even at 50% premium, but Microsoft is unlikely to do a financial deal and absorb the integration challenges and longer-term platform and customer support obligations unless it were a compelling strategic fit, which we do not see. Microsoft has its own operating system strategy with Windows Phone 8 due out next year, which it has been collaborating on with Nokia (NYSE: NOK). This operating system is not compatible with that of RIMM, and to alter course for either company at this juncture would likely be imprudent.
Nomura analyst, Rick Sherlund, said, "There have been various stories in the press that Microsoft (Buy-rated) may acquire Yahoo or RIMM, on which we wish to comment. First on RIMM, we do not see a compelling strategic fit and think this is unlikely. Second on Yahoo, we believe Microsoft has the benefit of scale in search through their current relationship with Yahoo and see no need to acquire the company. It is possible that Microsoft may be part of a larger group to invest in a minority position in Yahoo for some strategic business relationship, but this is very different than Microsoft buying Yahoo, that ship sailed by a few years ago and is unlikely, in our view, to be revisited given that Microsoft now has the scale they desired in search through their existing relationship with Yahoo. There are other parts of Yahoo that are likely of strategic interest to Microsoft, but there are likely smarter ways to work together than buying the company."
"On RIMM, running a simple merger model suggests it would be accretive to near-term earnings for Microsoft to buy RIMM even at 50% premium, but Microsoft is unlikely to do a financial deal and absorb the integration challenges and longer-term platform and customer support obligations unless it were a compelling strategic fit, which we do not see. Microsoft has its own operating system strategy with Windows Phone 8 due out next year, which it has been collaborating on with Nokia (NYSE: NOK). This operating system is not compatible with that of RIMM, and to alter course for either company at this juncture would likely be imprudent.
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