Bernstein Research’s Mark Moerdler, who covers Microsoft (MSFT) and rates its shares Outperform, this morning weighs in on the perennial topic of whether Microsoft might buy Research in Motion (RIMM).
The latter last night announced worse-than-expected fiscal Q4 results and said it faced “significant challenges” for the next several quarters as it restructures its business.
During a conference call with analysts, CEO Thorstein Heins downplayed prospects of any buyout of the company, even though many came away with the impression he had not closed the door entirely.
Moerdler throws cold water on the prospect of any Microsoft buyout, writing that “an acquisition of RIMM would not seem to make business sense” to Microsoft given that the company wouldn’t want to own the low-margin hardware business; it wouldn’t want to confuse its story in mobile computing by having two operating systems (its “Windows Phone 7” and RIM’s BlackBerry OS); the Windows platform is moving in the “right technological direction” and RIM doesn’t offer anything Microsoft wants; Microsoft wouldn’t want the headaches of dealing with shutting down RIM’s hardware operations; and while RIM’s intellectual property and patents might be valuable, that would be a takeout price that would be “far below” the current $7.5 billion market cap, by Moerdler’s reckoning.
Moerdler prefaces all that by noting that he has “spent time with numerous MSFT executives over the past few weeks including the president and CFO of the phone division while in Barcelona at Mobile congress3; Peter Klein, the corporate CFO; and the GM of investor relations. During those meetings we have discussed the company’s acquisition strategy and use of cash as well as the RIMM and the possibility of an acquisition.”
RIM shares are currently up 56 cents, or 4%, at $14.29.
Previously: RIM Rising: Despite Bleak Outlook, CEO’s ‘Candid’ Talk ‘Refreshing’, March 30th, 2012.