RIM Is a Poor Buyout Target: 10 Reasons Why

By Don Reisinger  |  Posted 2013-01-29 Print this article Print

5. It's a value issue

Looking at RIM products, it's hard to find the level of quality and value that folks would find elsewhere in the mobile space. For example, RIM's devices have small screens, physical keyboards, and most would agree, are not as worthy of a person's hard-earned cash as an iPhone or Galaxy S III. That's a problem for RIM, and something that won't be addressed so easily by its would-be buyer.

6. The changes would be too drastic

In order to unlock RIM's true value, a buyer would need to make several changes. For one, the company would need to offload unnecessary assets and start getting serious about eliminating unnecessary divisions. RIM might also want to open its network to carriers and start leveraging its patents. The problem is, all that takes time. While the company is transitioning its operation, it's losing money in its established business. That factor alone could scuttle any acquisition deal.

7. The enterprise is losing interest

Let's face it: The enterprise is central to RIM's future success or failure. And although the BlackBerry is still the most-used mobile device in the enterprise, the BYOD craze has created a problem for RIM. In fact, for the first time ever, iOS and Android combined for more shipments to the corporate world in the fourth quarter than BlackBerrys. The enterprise is slipping away from RIM. And that scares would-be buyers.

8. Developers don't care

In order for RIM to be successful, the company will need to have developers taking its software to the next level with third-party applications. However, there's a problem: Developers aren't jumping on the BlackBerry bandwagon right now. Until they do so, acquiring RIM for its mobile software seems like a bad idea.

9. International success is waning

There was a time when many believed that international markets would save RIM. Under this scenario, the company could lose the U.S. market and still make up for it elsewhere around the world. However, a look at RIM's market share in Asia, Europe, and emerging markets in South America seem to indicate that the BlackBerry isn't performing well. International expansion could provide some value to RIM's would-be buyer. Too bad the company can't deliver.

10. It's still overpriced

As of this writing, RIM is trading at $16.13, pushing its market capitalization—a measure of its total value—to $8.3 billion. For a company that's in decline and has no answer to the iPhone, that's expensive. After all, most companies are acquired at a premium, which means a buyer could pay $10 billion or more for RIM. Getting a return on that investment might never happen.

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