This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

RIM Bankrupt? How The Story Might End In Chapter 7

NEW YORK ( TheStreet) - Beleaguered technology giant Research in Motion (RIMM) is mired in a neck-and-neck race to see what will erode first, its entire market cap or its market share.

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

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 Candidates

Whenever talks of acquisitions come up so do the usual suspects. However, I continue to be a huge supporter of the idea that Microsoft (MSFT - Get Report) 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).
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MSFT $49.90 -2.04%
AAPL $95.03 -2.90%
FB $116.73 7.20%
GOOG $691.02 -2.10%
TSLA $247.54 -1.60%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs