Meanwhile, I have started to assess a race of my own. Seeing as there is now no light at the end of the tunnel, I have become intrigued at what will now arrive first, an acquisition or bankruptcy?
Buyout or bust?
When discussing RIM and the state of the mobile devices market ruled by Apple (AAPL) and Google (GOOG), I have started to realize a change in tone. No longer are investors trying to convince themselves that Wall Street has gotten this story wrong. Instead, it appears people have finally woken up and are no longer in denial, which is good thing.No longer are we asking the cyclical question of "Can RIM be saved?" Instead, the attention has turned to making its burial plans. The only question is, will it be buried whole, or will some of its parts be kept alive? Last week, upon releasing worse-than-expected fiscal first-quarter earnings results that further disappointed the market, not only did the stock drop by almost 20%, it served to re-ignite investors' greatest fear -- the possibility of bankruptcy. At one point this was hard to imagine since the company has over $2 billion in cash. However, during its earnings announcement, in which it said it will reduce its workforce by 5,000 people, Shaw Wu of Sterne Agee reminded investors this layoff will cost the company a significant amount of money.
How much money it costs the company remains to be seen. But of that $2.2 billion in cash that it has on its book, it can possibly see a considerable amount of it erode. Since its earnings announcement, the company has received five downgrades including a $5 price target by a research analyst at Jeffries Group, according to dailypolitical.com. This target supports what I have been speculating for quite some time, which is whether a RIM buyout arrive before its falls below $5.
Takeover CandidatesWhenever talks of acquisitions come up so do the usual suspects. However, I continue to be a huge supporter of the idea that Microsoft (MSFT) will come in and close the deal. It make too much sense for it not to happen. The companies have common enemies in Apple and Google. Besides, Microsoft, mired in smartphone disappointments of its own, has not been able to leverage its partnership with another struggling device maker, Nokia (NOK).
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