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Wall Street research firm issues buy recommendation on RIM, expects a takeover

Posted: , by Alan F.

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Wall Street research firm issues buy recommendation on RIM, expects a takeover
Despite the recent announcement of a $518 million loss in its latest quarter and a delay in bringing BlackBerry 10 smartphones to the market, Hudson Square Research issued a buy recommendation on shares of RIM. The reason for the buy rating has nothing to do with a turnaround at the Canadian handset manufacturer according to Hudson Square's tech analyst Daniel Ernst. Instead, Ernst expects RIM to sell off one of its divisions which could lead to a pop in the stock. The analyst told CNBC on Monday that with an enterprise value for RIM at $1.6 billion, there are plenty of opportunities to unlock this value.

Daniel Ernst, seen here on prior CNBC appearance, has a buy rating on RIM

Daniel Ernst, seen here on prior CNBC appearance, has a buy rating on RIM

Ernst says that RIM still has a global network with a book value of $2 billion and has 78 million subscribers. He believes that there are enough players who could easily pay $1.6 billion for mobile market share. Among the names he listed were Microsoft and Google. Still, the analyst was wary about his call which he realizes goes against the majority of the Street. He admitted that he could be wrong with the buy recommendation, saying that in the past he has been both right and wrong on the stock.

He also wonders whether or not RIM's board realizes the dire straits that the company is in. Discussing HP and Nokia, he says assets can always get cheaper and that RIM's board needs to make a deal now. RIM's shares rose a dime on Monday to $7.49, well off the 52 week high of $33.54. The all-time high is above $140.
"We're not doing this because we're waiting for Blackberry 10 to turn the business around. At a $1.6 billion enterprise value, there's just too much potential opportunity to unlock there."-Daniel Ernst, tech analyst for Hudson Square Research
source: CNBC

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posted on 02 Jul 2012, 16:25 5

1. cornerofthemoon (Posts: 601; Member since: 20 Apr 2010)

Holy Amazon Batman!

posted on 02 Jul 2012, 16:39 3

2. snowgator (Posts: 3604; Member since: 19 Jan 2011)

At what point would Microsoft actually over extend itself? A ton of projects they are already in, a ton of R&D going into their Windows 8 products, a ton of money is going into their Surface Tablets, Nokia, and Windows Phone 8 roll out. The next XBOX is being put off until next year due to priorities. This may be unrealistic. A partnership and loans similar to Nokia, maybe. But to outright take over to the tune of 2 Billion or so? Not buying it (pun intended).

What would RIM offer Google, that Google doesn't already have, or is on the process of improving? BBM across all Android- sure that would be great. The secure servers and BlackBerry penetration with businesses would be nice for combating Apple's and Microsoft's improving standing with professionals, but again at the near 2 Billion price, can't they do that from Google central?

Amazon kinda makes sense. But that is jumping in the deep end of the pool, which didn't work for HP and it's deep pockets, either.

We will see. Something has to give. RIM cannot survive until 2013 with the vultures hanging over their stock like this. They have to answer, or the worst case is coming.

posted on 02 Jul 2012, 17:10 2

3. Immolate (Posts: 310; Member since: 17 Jun 2011)

Buying Rim would be like punching a hole in your hull because the sailing is too smooth.

posted on 02 Jul 2012, 18:15

5. Lucas777 (Posts: 2137; Member since: 06 Jan 2011)

not really... just like adding a torn sail that might help or might not... kind of like moto for google

posted on 02 Jul 2012, 17:48 1

4. wizzardtech (Posts: 59; Member since: 12 Mar 2012)

Who knows selling the company would bring positive results. But im pretty sure it will cost them arm and leg too. There is no win win situation here, no matter what option they might consider there will always be a consequence. They have to do it now, before its too late.

posted on 03 Jul 2012, 05:52

6. groupsacc (Posts: 232; Member since: 28 Feb 2012)

These investment firms are a joke. They recommend to buy a stock, wait for everyone to buy and push up the stock price, then they dump their shares for profit, while everyone else is left hanging.

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