Analysis: Even after hiring bankers, RIM running out of options

Wed May 30, 2012 4:35pm EDT
 
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By Alastair Sharp and Nadia Damouni

TORONTO/NEW YORK (Reuters) - BlackBerry maker Research In Motion Ltd may be running out of options as it struggles to turn around its slumping fortunes with the help of a coterie of investment bankers.

The bankers - including leading M&A specialists from Royal Bank of Canada and J.P. Morgan - will explore options as drastic as an outright sale, one of the alternatives that RIM seems determined to avoid.

But analysts and investors doubt that anyone is ready to buy the whole company at this time, despite a price that looks tantalizingly cheap on paper. Interest in RIM looks slim to nil, two sources close to the matter said.

RIM's market capitalization is now $5.5 billion, down from $84 billion at the company's peak in 2008. It has $2 billion in cash, no debt and patents that experts say could be worth $2.5 billion.

"You are not going to sell RIM whole," said Charter Equity analyst Edward Snyder, who has covered RIM since its Nasdaq initial public offering in 1999. "The biggest problem RIM faces is that it's a very illiquid market in suitors for its phone business."

"There's very few companies that could exploit RIM's (hardware) assets to make a go of it. Those who can are already beating the pants off RIM."

RIM virtually invented on-your-hip email with its first BlackBerry device in 1999 and enjoyed almost a decade as a market darling, with quarter after quarter of soaring sales.

But it has hemorrhaged market share in the last few years, fading almost to irrelevance in a market dominated by Apple Inc's iPhone and devices from the likes of Samsung Electronics Co Ltd using Google Inc's Android software.   Continued...

 
A logo of the Blackberry maker's Research in Motion is seen on a building at the RIM Technology Park in Waterloo April 18, 2012. REUTERS/Mark Blinch