I present the following regarding rumors now swirling about the possible takeover of Blackberry manufacturer Research In Motion (RIM) by Vodadfone, and the equally interesting on again off again and possibly now on again interest of Microsoft (News - Alert) in buying Yahoo! with the usual caveats:
- This story is using information based on a blog posting by Thomson Reuters which, in a blog today, flogs both rumors. While Thomson Reuters tends to be a reliable source, it is basing its information on both possible takeovers on information from anonymous sources.
- I am not a financial analyst, and any commentary here personal opinion and absolutely should not be taken as giving financial advice.
So let’s look at these separately for a moment.
At the closing bell in New York, RIM stock was up a hefty 12.36 percent on the day and was continuing to surge in after-hours trading. What part of this rise can be attributed to the mere publication of news that someone is interested is hard to judge. After all recent rumors are that they have hired financial advisors and there is speculation that financier Carl Ichan (always looking to pounce on what he perceives as under-appreciated value that is not being realized) is preparing to take a large stake in the company. Hence, this could be partly a momentum play although the surfacing of Vodafone as a named potential buyer would give any stock a boost, especially given general market uncertainties.
Before you say, “Why Vodafone? Haven’t they been paying attention to Apple iOS-based and Android (News - Alert)-based sales and RIM’s downward spiral?” The international cellular giant (371 million customers in 30 countries and partnered in 40 more and the world’s seventh most popular brand) is no stranger to the device world, obviously, based on its portfolio of branded devices, and surely has been paying very close attention. The fact is, they are busy trying to expand their enterprise business. Going after the not insignificant installed base of RIM servers fits nicely with it plans in that area. This is not about Blackberry devices per se. It is about those servers and migration and integration services up selling opportunities.
On the Microsoft front, an exclusive Reuters report on the subject today provides a nice picture of the landscape for such a transaction lays it out pretty well:
- Microsoft desperately needs to be an important player in “search” and buying Yahoo! (which would give it the 88 percent of ad revenues it does not get from having Bing used by Yahoo! for search) could give it:
o The heft and revenues needed to finally give Google (News - Alert) a run for its money
o Stanch the Bing losses and possibly the criticism of CEO Steve Ballmer
o Be an AOL killer from an ecosystem perspective, especially with Skype integration on the way.
- It has the money as well as the necessity to pull of the deal. Other interested parties like private equity investors who might wish to sell off various parts of Yahoo! to minimize their risk, do not and neither does AOL for that matter .
- With the departure of former CEO Carol Bartz in September, Yahoo! is adrift strategically and monetarily. This is why, as pointed out in the Reuters piece, Yahoo’s financial advisers Goldman Sachs and Allen & Company are busy preparing to send financial information to potential bidders in a possible auction.
I forgot to preface this with the fact that Yahoo’s stock was up 10.1 percent today on the rumors. While this may not be Microsoft’s chance to take another bite at Apple (News - Alert), it certainly is an opportunity to provide more than a bit of irritation for Google. In fact, at least the rumors did not get cross-wired with Microsoft looking at RIM (very bad idea) and Vodafone thinking about Yahoo! (also would not make a whole lot of sense).
While I appreciate industry gossip as much as the next person, the part of the Thomson Reuters posting I appreciated the most is a nice little download they provided entitled “Investors to Benefit from Potential Tech Takeovers.” I am not sure which is most interesting, the difference in distribution of institutional shareholders according to their style of investing or the size of the holdings. I leave it up to you as to who is the “smart money” here. But, now you have some names to track as to who might benefit or suffer as the rumor mill continues to turn.
Peter Bernstein is a technology industry veteran, having worked in multiple capacities with several of the industry's biggest brands, including Avaya, Alcatel-Lucent, Telcordia (News - Alert), HP, Siemens, Nortel, France Telecom, and others, and having served on the Advisory Boards of 15 technology startups. To read more of Peter's work, please visit his columnist page.
Edited by Rich Steeves