Is RIM Really Takeover Bait? (RIMM, VOD, MSFT, NOK)

Research in Motion Ltd. (NASDAQ: RIMM) is surging today after a news report has turned into the rumor mill, and you can guess the rumor: a buyout.  The Independent out of the United Kingdom reported that there were vague rumors that RIM had asked an investment bank to consider various strategic options.

The current new buyer to-be in the rumor was that Vodafone plc (NYSE: VOD) was the likely buyer and the report gave a $45 target before.

We have speculated that perhaps RIM and Nokia Corporation (NYSE: NOK) should consider a desperation merger to stop the bleeding of market share, and others have speculated before that Microsoft Corporation (NASDAQ: MSFT) could ultimately be an acquirer.  We would note that neither scenario is likely, and we would be inclined to not believe that Vodafone, a carrier, would want to acquire a handset maker.

What is so odd is that the rumor mill is becoming far too widespread right now.  There are only so many acquisitions in tech and communications which can come at any given time.  Here are some of the current rumors flying around in the “TMT” sectors of technology, media, and telecom were surrounding Yahoo! buyout rumors and now regurgitated Akamai buyout chatter.  If all three deals were magically done with no premium it would come to $34 billion combined.

R-I-M is so heavily shorted that today’s move higher has to be exaggerated because of short covering.  Still, R-I-M shares are up 13% at $23.80 and we have already passed up the average daily volume with more than 25 million shares trading hands as of 10:50.

24/7 Wall St. has a serious question here for any would-be buyer: Who on earth would want to actually acquire R-I-M today?  The software services business is supposed to be the next catalyst that allows RIM to actually make revenues helping enterprise customers integrate Apple and Google services, but it seems counterintuitive that businesses would trust RIM to adequately integrate and expand services for competing interests. 

JON C. OGG