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As RIM slides, so does the takeover hurdle

A BlackBerry handset made by Research In Motion Ltd.


While Research In Motion Ltd.'s share price is drifting toward single-digit lows, other numbers related to the BlackBerry maker are also starting to look absurdly low – raising the question of just how far this stock has to fall before a well-heeled investor just takes it out.

In Toronto, RIM fell to a low of $10.89 earlier on Thursday, marking its lowest level since the end of 2003 and taking the stock perilously close to the deep-discount sounding $9.99. The usual bad news is causing the latest downward swing – a high-level departure – though this time it involves the head of RIM's global sales strategy. Prior to that, of course, the downward journey has been highlighted by dwindling market share in the smartphone sector.

At the current price, RIM's market capitalization is a mere $5.8-billion. Knock off RIM's substantial cash horde and the company's enterprise value – the theoretical takeover price – is just $3.8-billion. That's lunch-money for some big companies. Consider that Microsoft Corp. had more than $50-billion (U.S.) in cash and short-term investments at the end of 2011.

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Also consider that the Wall Street Journal was reporting last December that Microsoft and Nokia Corp. had "flirted with the idea of making a joint bid" in the months prior. Exactly when these flirtations occurred is hard to say, but RIM's share price roamed between $24 and $28 (Canadian) in the second half of 2011. If RIM was cheap enough back then to attract flirtations, it is now twice as cheap.

As well, analysts had expressed skepticism about a takeover last year because the company's then-co-chief executives, Jim Balsillie and Mike Lazaridis, were keen on engineering a recovery themselves. With the two executives now out of RIM's top office, and the new chief executive now saying that everything is on the table, this obstacle to a takeover seems to be gone.

Admittedly, you do have to wonder why anyone would be interested in the BlackBerry business at any price. According to the latest numbers from International Data Corporation, released on Thursday, BlackBerry shipments in the first quarter fell 29.7 per cent from last year and the device now has a thin 6.4 per cent slice of the smartphone market. Compare that to Android shipments (up 145 per cent over last year) and iPhone shipments (up nearly 89 per cent), and it's hard to get excited about RIM's potential.

Still, at $3.8-billion, you might think that someone would reach into the petty cash safe and take a flyer. Anyone? Anyone?

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