thought for the week – Could rim be swallowed in a ‘left of field’ move by the “Chinese Google” – Baidu?

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The much maligned Blackberry maker Research in Motion actually could in fact be a very interesting target for Baidu, certainly if the “Chinese Google” were to follow the same strategy that led to Google buying Motorola Mobility not so long ago. Buying RIM would allow Baidu and China to gain valuable technology and patents, plus it would create a possible “Baidu Smartphone” that could be put into the hands of millions of Chinese consumers.

Whilst we have seen a number of companies be considered as potential suitors for RIM, Baidu thus far has not been amongst the names listed but, the more one thinks about it, the more sense it seems to make for both companies.

Baidu is seeking to gain further traction into mobile whilst RIM needs to gain access to new markets and consumers. RIM is looking for a way out of its current fortunes and a deal with Baidu could be a way to address the problems it has now. It has a current market capitalization of just about $3.81 billion at a stock price of $7 but sits with cash of nearly $2 billion, the enterprise value is therefore just around $1.87 billion.

Leaked images of the new BB10

In contrast, Baidu has a market capitalization of circa $43 billion which means it would be extremely well-positioned to afford a buyout of RIM. Baidu could issue a mere fraction of its current market value in stock to buy RIM, and become much more than a search engine and advertising company aswell as pad out its cash buffer by nearly doubling it if the acquisition was made wholly in stock.

If a smartphone offering is a strategy that Baidu wants to pursue then Nokia could also be a target, although with a market capitalization of nearly $8 billion, it would cost significantly more than RIM.

As we have opined here on numerous occassions, we are in the endgame with Rim and one day soon, in our opinionm we are likely to open our screens and see at least a doubling in the stock price of Rim similar to what we have seen with Nokia in recent weeks.


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