MFG 2.0

Will Microsoft Eat BlackBerry (Round Two)

Around this same time last year, I wrote a post about the potential takeover of Research In Motion, the manufacturer of the popular BlackBerry line of smartphones, by Microsoft.

At the time, I didn't believe it. The numbers didn't add up, and RIM was surging. The deal was being explained as more of a market disruption by Microsoft than actually a good deal.

That was then, this is now. Last year around this time, RIM stock was trading at around 110-120 per share. However, the crimp in the economy has put order forecasts sharply lower (hell, the collapse of the banking sector alone has got to be figuring into sales manager's forecasts), and shares of RIM are trading at half that level, putting the stock firmly into acquisition range.

From a Reuters report:

RIM's shares, which were worth more than $148 on the Nasdaq market just four months ago, now are trading around the $60 mark amid the U.S. financial crisis and margin pressures the company is experiencing because of expenses related to launching new smartphones.

Microsoft, meanwhile, is striving to remain competitive against Internet mammoth Google Inc, which has made recent forays into mobile phone technology, and against Apple Inc, the maker of the popular iPhone.

Given Microsoft's massive cash stash, they could do a cash/equity deal without even having to interface with the credit market.

Plus, as I argued last year, acquiring a key device manufacturer (much less a leader like RIM) would immediately give Microsoft credibility and leverage in the lucrative corporate wireless space. That enticement definitely hasn't changed.

TAGS: Innovation
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