Research In Motion is not on Samsung Electronics Co’s immediate shopping list, but the ailing Blackberry maker may still be attractive to Asian smartphone makers looking to compete against Google’s Android, the world’s fastest growing mobile platform.
Samsung said on Wednesday it has no interest in buying RIM or licensing its operating system, refuting a tech blog report that ?RIM was looking to sell itself to the South Korean technology giant.
Shares of RIM, which has long been the subject of takeover speculation with its stock valuation lingering at multi-year lows, jumped more than 10 percent on the blog report, but fell back after Samsung’s denial.
But RIM, still valued at above $9 billion, may hold enough allure to seduce Asian vendors like LG Electronics Inc, HTC and ZTE, who do not have their own platform, said a source at a major Asian handset maker.
“As we don’t have our own platform, it’s (RIM) an attractive option to look into and we’re flexible about anything,” said the source, who has direct knowledge of the matter, but declined to be named as he is not authorised to talk to the media.
Samsung has its own platform called Bada and is seeking to boost its presence by merging it with a platform backed by chipmaker Intel.
“We haven’t considered acquiring the firm and are not interested in (buying RIM),” said Samsung spokesman James Chung, adding that Samsung had not been approached by the Canadian firm for a takeover and was not interested in licensing RIM’s mobile platform.
The Boy Genius Report website cited an unidentified source as saying RIM co-Chief Executive Jim Balsillie was meeting with companies interested in either licensing its software or buying a part or all of RIM, with Samsung leading the pack.
After Samsung’s denial,?Nasdaq-listed RIM shares tumbled 5.3 percent to $16.55 in extended trading, after closing up 8% at a 6-week high of $17.47. The stock rose as much as 11.1%.
Samsung may not be interested in buying RIM outright, but some analysts say that adding BlackBerry software may be a good fit with its strategy of bolstering software capability and adding corporate subscribers.
“We see RIM licensing BlackBerry 10 and charging $10 per device,” Jefferies analyst Peter Misek said in a note, referring to RIM’s operating system.
“Samsung and HTC would do this to gain access to RIM’s subscriber base, diversify away from sole dependence on Android and create more enterprise exposure. BlackBerry 10 is effectively an Android derivative and, therefore, many bridges are possible.”
Samsung has traditionally focused on growing its business from within and has no track record of major deals in recent years. In 2008, it withdrew a $5.9 billion unsolicited bid for flash memory card maker SanDisk due to the US firm’s deepening losses and uncertain outlook.
But it has since become more flexible on mergers and acquisitions as the hardware-focused firm seeks to boost its software capabilities to counter Apple and Google.
“It’d be helpful for Samsung or HTC to license BlackBerry OS so they can gain access to the corporate space,” said Vincent Chen, an analyst at Yuanta Securities.
Shares in Samsung slid 1.1 percent in Seoul on Wednesday, underperforming the main KOSPI share index, which slipped 0.3 percent.
Jefferies’ Misek said RIM could announce a deal within three months, and the appointment of a new chairperson could speed up the process. A spokesman for RIM declined to comment on the blog report.
Balsillie and fellow co-CEO Mike Lazaridis also share a role as board chairman, but, after pressure from investors, a committee made up of the rest of RIM’s board is due to report this month on possible changes to the unusual structure.
RIM already turned down takeover overtures from Amazon.com Inc and other potential buyers because it prefers to fix its problems on its own, people with knowledge of the situation told Reuters recently.
RIM’s shares have jumped nearly 40% since 21 December, when Reuters reported such interest, but the stock is still down almost 75% from a year ago.
The Waterloo-based company has likely held talks with several handset makers about using its new?QNX platform, said a prominent RIM shareholder, who said he was briefed by the company. The operating system, already used in the PlayBook tablet, will power RIM’s next-generation smartphones due out later this year.
The shareholder, who declined to be identified because he was unauthorised to speak on the record, said he also believes Samsung is interested in a licensing deal despite its statements to the contrary.
“I’m sure they’re talking about licensing stuff,” the shareholder said, referring to the South Korean smartphone maker. “I don’t know if they’re looking to buy the company and I don’t care.”
RIM’s existing product lineup has struggled to compete with Apple’s iPhone and iPad and the slew of large-screen and powerful devices from Samsung and other manufacturers using Google’s Android operating system.
It also faces a resurgent Microsoft, which has built mobile software that powers Nokia’s newest devices, among others.
The Canadian smartphone company has haemorrhaged US market share after a year marked by product delays and a botched launch of its PlayBook tablet. That has led to a 75% drop in market valuation and incessant talk about a sale of the company.
RIM’s shares have jumped nearly 40% since a Reuters report in December cited sources saying RIM had rebuffed takeover overtures from Amazon.com and others because it prefers to fix its problems on its own.
Two of those sources said at the time that RIM could strike technology licensing deals to boost revenue.
During RIM’s earnings conference call five days earlier, founder and co-chief executive Mike Lazaridis and his salesman cohort Jim Balsillie promised that RIM would look at all strategic alternatives as it seeks a turnaround.
“We are leaving no stone unturned,” Balsillie said. “We ask for your patience and confidence,” Lazaridis added.
The prospect of RIM shopping its QNX-based BlackBerry 10 software to rivals or even opening up its unique network for their use has excited some investors and analysts more than the less likely scenario of an outright sale.
“If Samsung or any other Android partner were to integrate RIM’s enterprise services like Blackberry Messenger into their offering, they would achieve instant differentiation in the increasingly monochrome Android space,” Frost and Sullivan analyst Craig Cartier said.
Such a deal would presumably give RIM’s stock a lift and ease some of the intense pressure on the company’s co-chiefs for drastic change.
“The ideal scenario for them would be to find something which unlocked additional value which could appease shareholders while they continue to run the business themselves,” Atlantic Equities analyst James Cordwell said in an interview.
Still, he expressed doubt that rival handset makers would rush to snap up a licensing agreement with RIM given most are well served by Android, Microsoft has created a viable alternative, and RIM has failed to deliver in the past.
“Ultimately it’s not proven in the market and they’ve got a pretty patchy track record in terms of actually delivering these things on time and then being as good as they say they’re going to be,” he said.