RIM now worth only $14.45 billion, should Microsoft buy?

June 18, 2011 | By Surur

rimdying

3 years ago RIM was worth more than $70 billion. Today the still proud company is worth less than 1/5 of that value, $14.45 billion. Even then there were rumours that Microsoft was looking at buying RIM, and now with the company by comparison extremely cheap, the question arises again.

Buying RIM, who is now worth less than double Microsoft’s recent Skype purchase, would offer Microsoft unprecedented access to business communications, carrier relationships and even consumer relationships, and unlike Nokia a brand that means something in USA.

Of course RIM is in this position because they are losing their hold on this very market, and Microsoft may well just be catching a falling knife, but then it is a very cheap knife, with the company’s price less than 5 times of its annual earnings, which is pretty ridiculous for a tech company.

If Microsoft did buy the company they could run it as a going concern and strip it for its assets while transitioning their customers and technology to Windows Phone. Whether this will be worth the trouble and expense (estimated at $17 billion is a buyout premium) is of course not clear but such a deal would certainly have many attractive aspects, especially with Dell as a Blackberry challenger seriously fizzling away.

Do our readers think the time for a deal has come? Let us know below.

About Surur

Site Admin and Windows Phone enthusiast, he has been using Windows Mobile devices since before they were called PocketPC’s. He is currently sporting a HTC 7 Trophy.

Tagged microsoft, RIM

St Thomas Aquinas

No. They should cut a deal with them they way they did with nokia. They make some beautiful candy bar qwertys. If the up and coming Bold touch 9900 had wp7 I’d be all over it.
http://www.rwalrond.com RWalrond

hmm, perhaps it’s time for another burning platform memo, this time from RIM. Would certainly send a serious message to the rest of the industry if Microsoft purchased RIM. Heck, Microsoft should buy both Nokia and RIM!
http://www.facebook.com/todor.tsvetkov Todor Tsvetkov

No, MS should not buy RIM … they just invested in Nokia and Skype …. I think that they invested enough. Now it’s time to improve as much as possible, not buying everyone If they do go on a buy spree they will lose a lot of money over nothing… well that’s it

Guest

Agree. It’s time to make existing investment successful before entering new ones. MS has a long track record of doing deals and then letting them fail. And the Nokia/MS deal has to work or WP7 is dead.

http://www.facebook.com/people/Marco-Ruiz/741463237 Marco Ruiz

Buying a company and having a Nokia-like partnership are two different things. I don’t think Microsoft wouldn’t have to buy RIM to benefit, however the form factor of most blackberries really doesn’t seem like it would mesh well with windows phone 7 (which requires a large, multitouch touchscreen). Blackberry touchscreen devices have never been very strong, and I’m not sure much should be done about this. It is blackberries time to go.

http://www.flavors.me/fludlyt Fludlyt

Agreed, their devices and windows phone 7 just do not go together.
Guest

I’d expect that RIM is moving there soon. They’re not stupid. A larger touchscreen is increasingly a minimum requirement to play. But approaching RIM too aggressively to OEM WP7 probably risks Nokia getting upset. And WP7′s market position is still too fragile for MS to risk that.

http://www.flavors.me/fludlyt Fludlyt

It doesn’t seem necessary to buy them, a partnership seems more worthwhile. Only reason they should buy them is if they have some interesting patents that are worth the cost. If they were looking for a mobile company the best choice would be Nokia.
Anonymous

This makes no sense.

Anyways I see rimm going lower in 2 years.
In 2 years some company Would buy rimm cheaper.
rimm the new palm
Anonymous

What I see is that RIM and Nokia will continue to drop in value, until the point that Microsoft can use the remainder of that $42 Billion they had put aside for Yahoo to buy both RIM and Nokia for under $20 Billion …

That would be total domination.

Thomas

Building hardware for an os platform has never been a ms strategy. The reasoning has always been that at the scale that windows is sold, they could never create all the variety of hardware consumers would want, so they let their partners build the hardware instead and sell the os to them.

Microsoft primarily sells software. Zune and kin were two big attempts at selling hardware but they failed miserably. These failures were reminders to ms of what their core competency is: software. Xbox and kinnect, arguably their only successful hardware products, earn money through software sales.

Francisofassisi

True historically. But the world is changing quickly and MS needs to change along with it. The historical OEM license model is starting to break down in PCs. MS can no longer count on either loyalty or double digit PC growth. And that same model hasn’t worked well in mobile at all. Thanks to the success of “free” Android, it’s unclear if it ever will. Currently, MS’s mobile effort isn’t long term sustainable. They’re likely losing in excess of $1B a year. And there’s no way they can make that up soon @ $10-15/unit max. So, they may end up having to embrace a direct model in mobile (at least). Although Nokia makes more sense there than RIM.

Gadgetebz

why not buy both ?? they have the money and RIM helps them in North America and Nokia helps everywhere else !!

Francisofassisi

Because buying both would take all their cash and then some (especiailly after repatriating $ from overseas), their stock would plunge even further on the news, Ballmer is already in trouble there, and MS sucks at acquisitions (recent examples: Danger, aQuantive). Not to mention that handling two is probably 5x harder than handling 1, because now you’re spreading limited resources across two totally different sets of challenges and trying to keep each onside.
Anonymous

Danger was a wash but aQuantive wasn’t then sold the parts they didn’t need

Eric

Nokia is a company that can bring a lot of new things on the table. That’s a very innovative brand. Nokia goes very well with WP7. It gives the high quality hardware WP7 is currently missing. The partnership was a clever decision.

On the other hand Blackberry brings nothing new on the table. It’s a dying brand. Their devices are oldfashioned. They missed the multitouch screen revolution. Their interface is a real mess. Look at the Torch 9800. What a failure!
The only interesting thing Blackberry has is patents. But they are probably not worth the money. Don’t buy this.

zzz

Innovative brand? Nokia is on the verge of bankruptcy from years of innovation stagnation and execution impedance. Lets be realistic WP7 and Nokia partnership is a hail Mary pass in the 4th quarter and 7 points down to worse hands in the NFL. It may score but it is not a perfect situation to be in.

Guest

Very good post

Anonymous

nup. Let RIM rot and die
http://unhub.com/eingoluq Eingoluq

I do not see an acquisition. what I do see is a situation in RIM’s future when they realise the cost of R&D in their next OS will be to much. They will be in the same situation that Nokia was then they may drop their OS for either Android or Windows phone 7. Even though I suspect Android, their recent Bing partnership might be Microsoft’s attempt to be friend them.
http://unhub.com/eingoluq Eingoluq

I do not see an acquisition. what I do see is a situation in RIM’s future when they realise the cost of R&D in their next OS will be to much. They will be in the same situation that Nokia was then they may drop their OS for either Android or Windows phone 7. Even though I suspect Android, their recent Bing partnership might be Microsoft’s attempt to be friend them.
Apsimm

They don’t have the cash in the US to do this. The Skype purchase made sense because it was based in Luxembourg. Most of MSFT’s cash is overseas and would be taxed at over 35% to bring it ‘home’. The US cash is needed to repurchase stock. Doesn’t make sense and won’t happen.

What they should really do is buy Sprint and sell WP7 only through this carrier and route all calls through Skype. Just put everyone on an unlimited data plan for $79 a month. That would shake things up.

Anonymous

As soon as Sprint’s map is as yellow as Verizon’s is red or the Death Star’s is blue, maybe it would be something to talk about.

Anonymous

I said a while ago that RIM will make Windows Phone. I wasn’t kidding. Maybe I was right, maybe partly, but very very interesting to watch.
Guest

Considering that MS was one of the first RIM partners, there’s some irony there.
Guest

Ballmer would get thrown out if he even attempted to buy RIM. Shareholders are still pissed about Skype, not to mention MS’s own stock decline this year.
Anonymous

There is no need for Microsoft to buy RIM at all. That would be total waste of money. RIM is on decline and they just don’t make hardware that is at par with Nokia. Nokia provides great hardware and adds value to the eco system with maps and other goodies. RIM does not have an eco-system that can compete with Google or Apple. There is no value that RIM can add to Microsoft as a purchase target. Now, a partnership to bring a device or a few that run the WP7 OS would be a smarter move for both (and likely more so for Microsoft).
Anonymous

Let them fall then caught them. Buy Nokia first then make Elop CEO put Ballmer as a overseer
Then add RIMM and Citrix
Anonymous

Buying RIM could work. Getting all those business customers would be huge. Microsoft would take over RIM’s enterprise/server software. Then MS could license hardware out to OEMs. The transition could be messy if not done quickly and well.

OoO

All those business/enterprise customers using Blackberry Enterprise Server already use Microsoft Exchange Server as well, i.e. buying RIM would mean buying your own customers once again, i.e. buying RIM would be stupid.

The main reason for buying Blackberry devices was push email (and not their hardware – nothing special here), something that Exchange Server supports natively without extra licensing cost (Exchange ActiveSync OTA).

ActiveSync is supported by all current smartphone OSes (iOS, Android, WM. WP7, Symbian) to some extent, and an increasing number of RIM customers are replacing BES with Exchange push email. Which reduces their licensing costs, gives them a free choice of handsets, and makes it possible to switch their email infrastructure to the cloud (Hosted Exchange, Hotmail, GMail all use Exchange ActiveSync to push email).

Anonymous

We’re talking about buying business customers not RIM technology. RIM is bleeding badly, but RIM’s 27% of U.S. market share is up for grabs. The obvious question is how do you migrate that 27% to Windows Phone without buying the RIM? Nokia sells well internationally, but is Nokia enough to jumpstart U.S. sales?

Guest

The 27% isn’t static; it’s in decline. That’s the challenge in buying them. By the time you pass shareholder, regulatory, legal approval, you might have bought 15 and declining while paying (with buyout premium) for 35.
Guest

The 27% isn’t static; it’s in decline. That’s the challenge in buying them. By the time you pass shareholder, regulatory, legal approval, you might have bought 15 and declining while paying (with buyout premium) for 35.
Guest

The 27% isn’t static; it’s in decline. That’s the challenge in buying them. By the time you pass shareholder, regulatory, legal approval, you might have bought 15 and declining while paying (with buyout premium) for 35.

Treiz

I think Microsoft should buy RIM if they get the chance, but not right now. I would wait and see just how low RIM’s stock goes first. I’d like to see BBM on WP7, but it’s not a priority.
Treiz

I think Microsoft should buy RIM if they get the chance, but not right now. I would wait and see just how low RIM’s stock goes first. I’d like to see BBM on WP7, but it’s not a priority.
1234

Why would MS want to run RIM? Who thinks MS can install WP7 on a Blackberry device and still keep the user base of Blackberries? Why not MS just keep pushing the current plans, this is still early days of the mini PC, (A.K.A. smartphone) and if WP7 appeals to Blackberry users, they can switch. The mini PC market is in crawl stage, walk then run come latter. Things change, sports teams win and lose at times, it can all turnaround. Who knew Apple could be here today when at one time it was 90 days from bankruptcy. Steve Jobs deserves a lot of good credit for his work making Apple a massive success. People like to say too late for new players in the market with IOS and Android, I don’t see it this way, the mini PC market has a faster turn over rate. Lower cost per device than desktop or laptop did, plus carrier subsidies speed up the turnover rate. I think the name of this game is iteration, and steady competition, there is enough room for multiple players. Apple wants to appeal to the elitists in us, not everybody wants to live in a gated community, some do! and the homes are usually expensive and nice quality. To some people a $200 steak tastes better because its cut with a silver knife. That’s fine, at the end of the day what else can you do with money other than spend it. Google wants to give us “free” and “open” software, so long as they have the exclusive ownership of our behavior patterns to sell for ALOT of $$$$$. They do produce cool technology and people like using it. But not everybody believes in free lunch, some are put off by the ongoing price of being the host. Some don’t care, some don’t think about it so people will continue to use it. Can you imagine driving rules “free” “open” with millions of drivers. What ever the puppy want’s to do is fine, yesterday it pissed on my bed, today it pissed on the carpet, it really seems to like chewing on the couch too. “Free” and “open” We all know self discipline has an advantage in life. Google has smart self disciplined people running the company, they would never think it could be run as a free for all! “Free” and “Open” is a bit of hypocrisy.WP7 will appeal to the middle way sensibility, the independent commonsense thinking part of us. The part that chooses a device because the simplicity of its functionality with smooth power. Its a good product from a company you can trust. At the moment the most innovative OS on the market. In fact a lot of cool innovative technologies being produced company wide. Not a lot of people realize this yet, and granted they are the underdog. Maybe its rising up in life that feels so great, the process, not so much sitting at the top. The unknown reaching for the high place.

Steve

Go outside…

http://www.facebook.com/people/Sergey-Durnov/100000964100298 Sergey Durnov

No, no, no. 17 bln is way more, than this company costs, I think.
http://twitter.com/paulbendall Paul Bendall

Go against the tide of feeling here but RIM in a corporate environment still has deep penetration. Activesync is nowhere nears as granular when it comes to device controls as Blackberry Enterprise Server (BES). In addition the WP7 platform, even with Mango update, isn’t going to offer the level of control and encryption that corporates require. That will have to wait until Apollo.

So do MS buy RIM? Maybe another question is would MS buy RIM to avoid someone else buying them? It would also give them greater control over hardware, a recognised brand in the US, a deployment mechanism and stash of patents

Paul

Yeah. that’s a decent counter argument. But I don’t think shareholders would support another “we’re spending billions to keep something away from someone else” deal. HP imo is the peson who could most benefit from buying RIM. Currently, they have no phone presence, which is insane. However they have the OS and have previous experience with Waterloo (used to have a division there years ago).

Gadgetebz

I think there is a huge opportunity here for Microsoft to purchase to great companies for a combined $45bn……. RIM has huge respect in North America and Europe and Nokia is the same in Europe and the Rest of the World. These purchases would give Microsoft greater influence in their dealing with service providers and OEMS… It also gives them a share of revenue from booming hardware sales that are expected to be perhaps half a billion devices per year by 2015..
After purchases Microsoft services would include Zune(or its replacement), Xbox Live, Windows Live, Bing, Skype, BES (including BBM), Ovi Maps, etc……… These services could even be licenced to Android OEMS and HP Palm on agreement they make great hardware for Windows Phone also. Obvioulsy some features could stay unique to or come to Windows Phone first.
SWSD 40

Someone already said it correctly , Microsofts main cash is overseas , theres a reason for this , 35% corporate tax , thats alot of extra cas for company thats dying! No , bjuying wouldnt be a real option , Partnering up would be a smart move for RIM , but it will be a costly move and one they may have to make in order to remain feasable , there patents are still very viable in the business area and Microsoft would love to have some of them (so would google and apple) ,but since RIM hates google and apple , I dont see them giving anything away , Microsoft would have limited power over the patents witch would benefit both of them!
Im not sure what OS rim use now , but if they can make the QNX embedded OS fuunction better (Playbook) ,I see that being a real player in the industry and utilyzing touch and ditching or at the least making touch optional to there keypad is the future of RIM! I f they dont find a true touch system in the next 1 1/2 they will likely be bought by HP or Dell!

Guylong

While not over seas, RIM is in another country. Not sure what the Canadian corporate tax rate is. Microsoft really only needs their patents.

http://twitter.com/Summerclaw Hansel

Microsoft shouldn’t bother. The should put their faith in Nokia.
http://www.facebook.com/emiliano.magliocca Emiliano Magliocca

yeah i hope microsoft will buy rim..i thought this before he bought nokia, it will be the best choice acquiring rim customers in all world and have a definite OS for business and fun.
go microsoft let’s buy rim
Guest

I think microsoft should make a deal with RIM to get BBM onto windows phones I would like that
Anonymous

I think Microsoft should buy Tmobile and make them a Nokia powerhouse in the states.
As far as Blackberry, the only thing of value would be their patents. Not sure if Microsoft needs them or instead just needs to keep them out of someone else’s hands.
Buy Tmobile Microsoft and let them run themselves and make them The House of Nokia in the states.
Et Jay

Microsoft has never been very good at aquistions… remember aQuantive, Danger, Web TV…
http://twitter.com/SugarMouth Mark Carruthers

Just because you have the money does not mean you buy everything that seems like a good deal. I say no.
MSblog

With $70 billion maybe Apple should buy them all:

Nokia $22.6b
RIM $13.8b
HTC $25.4b
Motorola Mobility $4.2b

and still have $14 b to play with…

StockTrader

There is no need to Apple is doing well enough on their own, wish MS understood the consumer market as well as those guys.