Microsoft might buy Research in motion

Share prices of Research in Motion has dropped and speculations that the maker of smart phones would soon be taken over. But buyers are unlikely to go to Blackberry anytime soon. Shares of the Waterloo Company plunged more than 8% on Oct.20.

In June, the company shares lost more than 60% of their value so it’s not hard to play matchmaker as it again plunge in recent days.

Peter Misek, an analyst at Canaccord Adams, was quoted as suggesting Microsoft may be interested should the shares fall much further.

An increasing rivalry with Apple and economic turmoil are contributing to RIM’s vulnerability. On Oct. 20, Bindu Benjamin, an analyst at broker First Global, downgraded RIM to "market perform with an under-perform bias" over concerns that heavy spending in the face of competition will eat into profit margins.

The same day, Morgan Keegan analyst Tavis McCourt cut his 2009 revenue growth forecast to 84% from 92%, saying RIM faces a tougher economic environment.

An offer can be made

The decline in RIM's share price gathered steam after the company said in September that margins would narrow in the coming months.

Further stock price weakness, the theory goes, might get a bid from Microsoft, particularly in the wake of its failed pursuit of Yahoo.
 
"If RIM's management would be willing to entertain the discussion, and if its executives are willing to partner up, I think Microsoft would take their call," Misek says.

Microsoft has more to gain from RIM in the wireless arena than it did from Yahoo on the Web, Misek argues. "Microsoft has already lost the war over search as currently defined," he says. "It's now at risk for losing the next search war, in the mobile world."

RIM's technology makes more efficient use of wireless data networks, and its software works well with Microsoft's enterprise e-mail tools, adding to its allure, Misek says.