BlackBerry maker's missteps stir talk of its sale

Fri Sep 16, 2011 4:18pm EDT
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By Alastair Sharp and Sinead Carew

(Reuters) - Research In Motion's dismal quarterly results, the latest in a string of disappointments for shareholders, may have pleased prospective buyers coveting the BlackBerry maker's treasure trove of wireless patents.

RIM's stock tumbled on Friday, the morning after it gave investors little reason to expect an early turnaround for the Canadian company that once dominated the smartphone market.

But RIM's battered stock price may burnish its allure as an acquisition target. With a market cap of $12.5 billion, down almost a quarter in the last day, RIM is looking cheap for a company that still turns a tidy profit, generates massive cash flow and carries no debt.

Perhaps the company's most attractive assets are more than 2,000 patents it has filed with the U.S. Patent and Trademark Office. On top of that, RIM was a part of a consortium that nabbed a portfolio of patents from bankrupt Nortel Networks.

The sale of Motorola Mobility to Google for a rich 63 percent premium underscores how tech companies have become ever more determined to control patents to ward off expensive infringement litigation.

Meanwhile, RIM's management have struggled to execute a difficult software transition in a hyper-competitive landscape dominated by the likes of Apple and Google.

"There's a wound festering in RIM, and either you need to cut off the arm or you let it get worse, and the market is telling you it's going to get worse unless they make a change," said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services in Toronto.

While RIM has long been rumored to be in the sights of cash-rich Microsoft, that option became less likely with the software giant's tie-up with Nokia. Many now point to a private sale as a way to take pressure of the Canadian company while it weighs its next move.   Continued...

<p>A new Blackberry tablet, the PlayBook tablet computer, is displayed at the GSMA Mobile World Congress in Barcelona February 16, 2011. REUTERS/Gustau Nacarino</p>