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Microsoft rumored to inject $3.5 billion into RIM

April 13, 2012

Saying that RIM had a poor 2011 is a bit of an understatement. RIM has gone from dominating the US market with a 44% market share in 2009 to less than 17% by the end of 2011. The Canadians have also had to drastically slash the prices of their Blackberry PlayBook, just to have a chance at competing with the iPad and a slew of Android tablets available on the market.

In more disappointing news, RIM announced last December the delay of the release of its Blackberry 10 platform to late 2012. In addition, over the last year, RIM has seen a 75% drop in its stock price, leading unhappy investors to call for a buyout.

A lot of financial analysts have a negative outlook on RIM, with some stating that there is no room for the striken company in a cut-throat market disputed by Apple and Android devices. So, why would anyone want to buy the struggling RIM?

First of all, take this report with a grain of salt, because, as many have pointed out, buyout rumors (even unsubstantiated) tend to give stocks a nice boost.

We’ve already heard successive chatter about a potential buyout by UK-based telecom giant Vodafone, Samsung, and Amazon. Nothing concrete has come out of these earlier rumors, but with comments by RIM’s new CEO Thorsten Heins about looking at all options on the table, this might change very soon. Since then, takeover rumors have re-surfaced, this time involving Microsoft. According to a report from financial blog Benzinga, Microsoft is preparing to make a $3.5 billion investment into RIM. In case you’re crunching the numbers, that would equivalate to a buyout, as RIM’s market valuation is currently at $6.88 billion.

There is no information on what this “investment” involves, with speculation ranging from Microsoft’s interest in RIM’s patent portfolio to a complete takeover of the company.  But, as of now, this is still a rumor, with both RIM and Microsoft representatives denying the report. Microsoft is also aggressively marketing its Windows Phone 7, with licensing deals with Nokia, HTC, and Samsung, which also affects the credibility of the rumor.

It’s not all bad news for RIM, however, with over 77 million Blackberry subscribers, and its still popular and exclusive Blackberry Messenger Service going strong. But, whether such an investment or buyout by another company will be enough to save the troubled company is yet to be known.

What are your thoughts? Can a buyout save RIM? Or is the company finally done?