Is Research in Motion a Real Acquisition Target Now?

Pundits and prognosticators are trying to discern where Research in Motion (NASDAQ:RIMM) goes from here.  The once-successful company has seen its market share for smart phones disappear and its stock price collapse.  The shares have declined $32.24, or 55.46%, to a recent $25.89 year-to-date, and by slightly more over the past 52 weeks.  Its market capitalization is now $13.56 billion.

Bloomberg reports this morning that rumors about potential acquirers have been flying; mentioned are Microsoft (NASDAQ:MSFT) or Dell (NASDAQ:DELL).  Let’s take a quick look at each of these companies:

  • Microsoft (NASDAQ:MSFT): Microsoft, which has been under its own pressure as of late, is an attractive acquirer for RIMM because the $50 billion that Microsoft has on its balance sheet would solve two problems almost immediately: (1) it could afford to pay RIMM shareholders some sort of a premium over its current market value, and (2) Microsoft could spend billions more on research and development efforts to bring RIMM up to par with Apple‘s (NASDAQ:AAPL) iPhone and Google’s (NASDAQ:GOOG) Android operating system.  Microsoft’s extensive presence in the corporate computing sector, along with legions of loyal Blackberry users could prove a potent combination.  And, of course, Microsoft’s recent acquisition of Skype could be used to enhance Blackberry’s technology.  All of this having been said, Microsoft’s stock has been more or less stagnant for the past decade, and major value investors such as David Einhorn have been agitating for CEO Steve Ballmer’s removal. Competitors to Watch: Google Inc. (NASDAQ:GOOG), Novell, Inc. (NASDAQ:NOVL), Oracle Corporation (NASDAQ:ORCL), Intl. Business Machines Corp. (NYSE:IBM), Hewlett-Packard Company (NYSE:HPQ), Yahoo! Inc. (NASDAQ:YHOO), Apple Inc. (NASDAQ:AAPL), Adobe Systems Incorporated (NASDAQ:ADBE), Intel Corporation (NASDAQ:INTC), and Sony Corporation (NYSE:SNE).
  • Dell (NASDAQ:DELL): Dell has $14 billion in cash on its balance sheet, which likely would mean that at least a portion of any deal they would consider would have to be funded by debt.  Given Dell’s present debt level of $7.61 billion, and its debt to equity ratio of 90.96, it’s not clear that Dell would be the best bet.  Interestingly, Dell’s shares have also been flat over the past decade, as competitors such as Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) have passed them by. Competitors to Watch: Hewlett-Packard Company (NYSE:HPQ), Apple Inc. (NASDAQ:AAPL), Silicon Graphics Intl. Corp (NASDAQ:SGI), Super Micro Computer, Inc. (NASDAQ:SMCI), Intl. Business Machines Corp. (NYSE:IBM), Cray Inc. (NASDAQ:CRAY), EMC Corporation (NYSE:EMC), Microsoft Corporation (NASDAQ:MSFT), and Intel Corporation (NASDAQ:INTC).

What do you think is the best bet for RIMM (NASDAQ:RIMM) shares?

(Note: Selected financial data are sourced from Yahoo! Finance.  All data are assumed to be accurate.)

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