Research In Motion Ltd., once worth $83 billion, fell more than 80% from its record three years ago as Apple's iPhone and Google's Android platform siphoned off smartphone customers.
The Waterloo, Ontario-based company, which plunged last week after saying quarterly sales may drop for the first time in nine years, closed yesterday at $25.89 a share, or 4.7 times earnings next year. That's less than any communications-equipment provider, according to data compiled by Bloomberg -- who's reporting that the failing RIM is now looking more and more like a potential acquisition target -- and Microsoft is the most referenced takeover candidate.
Scott Sutherland, managing director for Wedbush Securities, said acquiring RIM could make sense from a strategic point of view, as it would strengthen Microsoft's position in the enterprise space.
"RIM is very strong in the enterprise...and it would just further strengthen (Microsoft's) enterprise solutions," said Sutherland. "It would also give them the entire hosted end-to-end data network that RIM uses to deliver mobile data and messaging, which is a very efficient network."
Microsoft hasn't made any noise about acquiring the struggling company, but analysts suggest the drop in stock price (and possibility of a turnaround) make it an attractive purchase. RIM, once worth $83 billion, has seen revenue fall and market share crumble as competition increases in the mobile space. Now worth an estimated $13.6 billion, its failures are many, critics say: Lack of vision and foresight; a failure to innovate as Apple and Google lure customers away with email-friendly devices that can do much, much more; a late-arriving tablet that lacked the native email feature that has been the Canadian company's selling point for years.
Jim Balsillie and Mike Lazaridis, RIM's co-CEOs have remained steadfast in their commitment to the company. But, analysts say the potential to snap up the company for an estimated $40 per share could attract both Microsoft and Dell, both companies looking to make headway in the mobile market.
But would an acquisition really happen?