Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

RIM hires Goldman Sachs? Sell-off likely, but not soon

By Zack Whittaker | January 13, 2012, 6:12am PST

Summary: Goldman Sachs is thought to have been hired by the BlackBerry maker to field potential buyout bids. While a sell-off is a possibility, it will not happen for a while yet.

Research in Motion’s share price rose by over 5 percent last night, after speculation emerged that the flailing BlackBerry maker hired Goldman Sachs to strategically advise the company’s future direction.

The news came from an unnamed Wall Street trader speaking to Reuters* after market close. But the trader remains sceptical that a sale could come any time soon.

Research in Motion has fallen by over 70 percent in the past 12 months, but settled yesterday at over $16 a share.

The smartphone maker regularly is at the center of sell-off rumours. The market cannot decide on who could, or should buy the company. Microsoft or Google makes the most sense for the email capability, but the companies have other worries to concern themselves with a failing smartphone maker.

It is also not the first time the company’s stock has jumped as a result of a takeover bid. In fact, despite the steep decline in RIM’s share price to below book value, persistent rumours that the company will be taken over caused the stock to raise 10 times since the beginning of August, Bloomberg reports.

While the tag team of co-chief executives Mike Lazaridis and Jim Balsillie remain in control of the company.

ZDNet’s editor-in-chief Larry Dignan called out on Lazaridis and Balsillie to leave the company they co-founded. Perhaps it is time for the board to favour a Scott Thompson-like company director; someone who is renown for turning a company around?

RIM’s investors are growing hungry for change. Earlier this month, a group of shareholders is calling on the company to be broken up or put out for sale.

Speaking to the BBC’s World Service, chief executive of activist shareholder Vic Alboni said that Research in Motion has “lost it”. While he believes the company should be trading at a far higher price than it currently is, he added that, “the party is over”.

If the reports are true that RIM has brought in Goldman Sachs to field potential buyout bids, it could indicate that the company’s executive team is finally considering the ‘nuclear option’ of a sell-off. As sister site CNET notes, Yahoo hired investment banks months ago to perform much of the same purpose, with no avail.

A spokesperson for Research in Motion declined to comment on market speculation.

* Updated story to correct source: Fox Business syndicated Reuters wire.

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Topics

Goldman Sachs Group Inc., Research In Motion Ltd., Mobile Security, Zack Whittaker

Zack Whittaker, a criminologist who studied at the University of Kent, Canterbury, is a journalist, writer and broadcaster.

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Why sell?

puzzzled Updated - 14th Jan

Nascent but growing NFC adoption (RIM with 4 handsets, Samsung and LG with one each) being pushed hard now by carriers and credit card companies,for the purposes of creating the reality of mass scale mobile commerce of all kinds will provide many opportunities for solution providers to either provide a secure platform or risk having hackers erode confidence in their platform. The stengths of RIM's "security first and always" philosophy and fully integrated handset network combination begins to look like a real advantage. Why sell?

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RE: RIM hires Goldman Sachs? Sell-off likely, but not soon

Heenan73 13th Jan

It suggests that no-one has approached RIM - despite all the discussion here and elsewhere, none of the Likely Lads has formed an orderly queue to buy the company.

The hiring of so-called 'experts' (last couple of years aside!), means that a break up of the company is much more likely; OS / hardware / patents.

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Where the patents go, so likely would the OS.

x I'm tc 13th Jan

@Heenan73
Seems like a Microsoft/Nokia buyout would make the most sense. The former gets the IT and the latter gets the Brand.

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RE: RIM hires Goldman Sachs? Sell-off likely, but not soon

erichon99 13th Jan

@jdakula I agree starting to make sense for me too as each day passes. Maybe it will happen but not until 2013 until we see how receptive consumers and corporaters are to the latest offerings in late 2012

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Not bullet-proof, but a vest

Robert Hahn 13th Jan

It might also mean the opposite. When you have "activist shareholders" breathing down your neck, telling you (and everyone else) that the company would be worth more dead than alive, hiring an investment bank to shop it around does two things: it buys you time, during which you can tell Mister Activist Shareholder that you are acting on his concerns, and it also provides actual data (like "No one is interested" or "Google will give you fifty cents for it") to counter the usually wild and usually unsubstantiated claims of the "activist shareholders."

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Good Observation

happyharry_z 13th Jan

@Robert Hahn nuf said.

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RE: RIM hires Goldman Sachs? Sell-off likely, but not soon

lorax1284@... 13th Jan

@Robert Hahn

I agree... I think Goldman Sachs will come up "keep doing what you're doing, harder, faster, and more often, and don't have system outages."

Also, while I see these "activist shareholder" articles, where they whine about how low the share price is, clearly they are not looking out for the best interests of the company... they want action just so they can get their money out when the stock spikes.

Sure, they have legitimate "hindsight is 20/20" complaints about how RIM didn't react quickly enough to the threat of iOS, but what you rarely see in articles critical of RIM "the COMPANY" are suggestions about what they SHOULD be doing to RIM "the hardware and infrastructure" now or in the near future, that they are not already doing.

Right now, they are working all out on BB10 OS, which is the basis of the PlayBook (and despite what uninformed never-touched-a-PlayBook-in-their-lives naysayers claim, the PlayBook is excellent) and have hired a new director of developer relations who has moved things forward, including some high-profile PlayBook software releases (Skype... where are you?) they have increased their marketing efforts, leveraging social networking etc. and making some pretty tough decisions about whether they delay release of the next generation of hardware to wait for new silicon that will give them a competitive edge... and doing all this while still GROWING in markets outside the US (investors have a USA myopia)

In my opinion their biggest failure w.r.t. the PlayBook was marketing it as a general-purpose tablet, rather than a "Just for BlackBerry handset owners for now..." and launching a new tablet brand or relaunching the PlayBook tablet brand when the native email etc. issues were resolved... they've ditched their VP of Marketing (woe to you, Samsung).

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Thank goodness for activist shareholders.

otaddy 13th Jan

@Robert Hahn RIM, like many other companies, has senior leadership that is asleep at the wheel. I always love to see the activists giving the good ol boys club a wake up call.

If they were doing such a good job, then the activists wouldnt be complaining now would they? I wont shed a tear if the co-conspirators of RIMs demise get shown the door and have to deploy their golden paracuhutes.

Better this, than have RIM go under, and lots of workers lose their jobs.

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I still like Amazon as a potential suitor for RIM

Rabid Howler Monkey 13th Jan

They completely lose their dependency on Google's Android OS. They gain QNX, a rock-solid OS, hardware and [dwindling] enterprise market penetration with BlackBerry smartphones. This would enable Amazon to match Apple's integrated hardware and software business model for personal computing devices. It would also get Amazon's foot into the door of the enterprise on the client side. (They already have a presence in the enterprise with Amazon Web Services.) In addition to QNX's use in BlackBerry smartphones (forthcoming) and the PlayBook tablet, it has a strong presence in the In-Vehicle-Infotainment and embedded systems markets. And I believe that Amazon would also like to play in the IVI market.

Can Amazon get RIM at the price point they want? It would be truly sad to see RIM go down the Palm/WebOS path.

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RE: RIM hires Goldman Sachs? Sell-off likely, but not soon

nigel.deighton@... 13th Jan

RIM became Research in (stop)-Motion several years ago. Their enterprise market strength is mainly a myth outside of North America and in the last five years or so have caught consumer attention less times than one has fingers on a hand. Every time their enterprise solution has an outage they score an immediate own goal. What used to set RIM ahead has been holding them back for quite some time. They have not really nurtured an ecosystem and that is their consumer death knell.