Everyone knows that Motorola Mobility, Nokia, Broadcom and Qualcomm have some of the largest patent portfolios in the business. That said, RIM also has a respectable patent portfolio, and most people know that RIM has spent considerable amounts over the last decade to develop its own stacks. MMI and Nokia are scraping near the break-even level, while RIM remains hugely profitable, however, so Google would be able to pay a far bigger premium for RIM than any of those other companies.
With RIM’s enterprise value near $10-billion, and other patent portfolios going for approximately $5-billion, it would appear RIM is trading at an even more amazing bargain price than first meets the eye.
Conclusion: Who else would join a bidding war?
I don’t think the U.S. government – even more so than the Canadian – would allow RIM to be sold to the Chinese, or most any other non-North American company. It’s just so sensitive to our national security.
So apart from Google, this leaves only a few companies as potential suitors, in order: HP, Dell, Microsoft and Motorola. Of those, HP has the muscle, Dell has sufficient muscle, Microsoft is highly unpredictable, and Motorola would have to make it more like a merger of equals. I don’t think any one of them are as ready right now as Google from a motivation and financial standpoint combined, although they are all possible and should by no means be ruled out.
The platform convergence, NFC, security and patents all point to Google, in my opinion.
Anton Wahlman was a sell-side equity research analyst covering the communications technology industries from 1996 to 2008: UBS 1996-2002, Needham & Company 2002-2006, and ThinkEquity 2006-2008. At the time of publication, this writer was long AAPL, GOOG, QCOM and RIMM.
