雅虎别再犹豫，把RIM收了吧！

Yahoo's Next Best Move? Buy/Merge With RIM

by Bolaji Ojo

EBN blogger Anna Young says Yahoo Inc. (Nasdaq: YHOO) needs a new bolder and riskier growth plan. Here's one: It should buy troubled BlackBerry maker Research In Motion Ltd. (RIM) (Nasdaq: RIMM; Toronto: RIM). Both companies need each other direly, and their options dwindle as they dawdle, even as competitors chew up their respective market shares in search engine and mobile devices. (See: Yahoo, Yang-less, Needs Riskier, Bolder Plan.)

The two companies are plagued by a similar malaise -- the inability to transform beyond original services and products. RIM was once King of the Hill in smartphones and mobile enterprise messaging. Its BlackBerry smartphones were the darling of business people, but the waists that once were adorned with RIM phones are now sporting Apple Inc. (Nasdaq: AAPL) and Google (Nasdaq: GOOG) Android devices.

Anecdotal evidence is piling up that RIM's share of the enterprise messaging market will keep declining, unless it comes up with a new plan. Recently, I misplaced my company-issued BlackBerry device and was offered an iPhone 3 as a possible replacement. I stuck with the BlackBerry, but until then, I didn't even know my company supported the iPhone for enterprise messaging. It does, now. And, it's not alone. More companies, pressured by employees tired of the BlackBerry's limited options, are supporting and offering competitive products. Personally, I am discovering newer and newer uses for my Samsung Electronics Co. Ltd. (Korea: SEC) Galaxy S2, which I am quite satisfied with. Apparently, I am not alone. Even Apple co-founder Steve Wozniak believes Android devices trump Apple iOS in some areas.

Yahoo's position isn't any better, and it is in fact getting worse. The company is losing market share fast to Google and Facebook . Its advertising revenue base is being eroded by social media companies like Facebook, and the decline is likely to keep accelerating. The company's sales have been sliding with year-over-year quarterly revenue dropping in the three months ended September 30, 2011 to $1.2 billion from $1.6 billion, in the year-ago quarter. Sales for 2011 are estimated to be in the range of $4.4 billion, down sharply from $4.6 billion in 2010. Forecasters expect Yahoo's 2012 revenue to rise only slightly from the prior year to $4.56 billion.

Neither company is a great acquisition target. Yahoo has no offers on the table, and it appears Microsoft is only interested in buying bits and pieces of the company. This is not in Yahoo's interest. If Yahoo sells its 40 percent stake in China's Alibaba and 35 percent interest in Yahoo Japan, its market value is likely to decline even further, and so will its ability to compete globally. No other potential offers are likely for Yahoo, which, with a market capitalization of nearly $20 billion, is too large to be gobbled up by anything but the biggest tech companies in the market. None of them appear interested.

RIM is not fielding any plausible acquisition offers, either. The company's stock price soared earlier this week on speculations Samsung Electronics might be interested in making an offer, a rumor that the Korean company torpedoed on Wednesday. RIM's shares are already giving up the gains; on Wednesday, they dove more than 3 percent after the Samsung report.

Analysts are not particularly gung ho about a deal for RIM. Shaw Wu of Sterne Agee was concerned that RIM's current market value (about $9 billion) poses a challenge to potential bidders, since the upside might be "limited." In a report emailed to me on Wednesday, Shaw poured cold water on the likelihood of Samsung or Microsoft making a bid for RIM. He said:

We see $5-$7 billion potential value, meaning $9-$13 per share. We believe its most valuable assets are arguably its patent portfolio and BlackBerry Messenger (BBM) app. We estimate its patent portfolio could be worth $2-$3 billion assuming the prices that an AAPL led team paid (which RIMM was part of) for Nortel assets and GOOG for MMI. For BBM with its 45 million users, we estimate it could be worth $2-$3 billion.

Last but not least, we believe the value of its push network and BlackBerry OS are more questionable given competitive issues both have had in the marketplace but nonetheless, we assign a value of $1 billion (the price paid for PALM). This gives us a valuation of $5-$7 billion, meaning a stock price of $9-$13, which is a bit below where it is currently trading.

Other considerations. The other considerations to keep in mind are: (1) Samsung is doing very well with Android -- in fact, they are taking share against fellow Android licensees HTC and Motorola; (2) MSFT has effectively made its bet on its Windows Phone 7 operating system -- it makes little sense to bet on another OS that is having difficulty; and (3) the Canadian government may not allow an acquisition by a foreign company due to national security interests.

Ouch. The game is not lost, though. RIM is still a profitable company with no long-term debts. So is Yahoo. RIM has a healthy balance sheet (about $1.5 billion in cash, short- and long-term investments) and so does Yahoo (no debts and $7 billion in cash, short and long-term investments). RIM's annual sales of $19.9 billion (fiscal 2011) dwarfs Yahoo's ($6.3 billion in calendar 2011), but the search engine provider has a much bigger market capitalization ($20 billion versus RIM's $9 billion), which means investors aren't that impressed with RIM's higher sales.

So, this is what I suggest. A merger of the two companies -- some market watchers don't believe in a merger of equals, and I tend to agree. Yahoo will therefore dominate such a venture. What are the advantages of such a hook up to both companies? First, a much needed new lease on life; second, the opportunity to enter new markets and solidify positions in existing operations; third, a chance to leverage about $8.5 billion in combined cash and significant borrowing strength to push for a bigger role in adjacent markets; and, lastly, the chance to fight for a future in the mutually supportive Internet and wireless markets.

But will RIM and Yahoo take such a step? I doubt it. They've both been too timid for far too long, and RIM's current co-CEO and co-chairman structure is in itself obstructionist. What's clear is that the status quo isn't in either company's interest.