weekend newswire reports research in motion is considering sale of handset division

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Todays report that RIM is considering a variety of options including an outright sale of the handset division, splitting into two or a partial sale of the company to a third party does not surprise us. Our fellow blogger Contrarian UK listed the issues surrounding the eponymous Blackberry maker in a post yesterday and we have been long the stock since $13.

My belief is that if one party moves on RIM – Microsoft, Google or, at the current market cap, quite possibly a private equity house (most likely a Canadian one given potential issues re Foreign takeovers under the Investment Canada Act), then an auction will break out. I keep returning to the following stats – 

With a market cap of $3.81 billion, Research in Motion carries a price-to-book ratio of 0.47, a price-to-sales ratio of 0.26, and maintains an operating cash flow of $2.91 billion. That’s right, the company trades at just over 1 times operating cashflow. The company has around 14% of the global smartphone market or 78 million subscribers which produces revenues to the company of $1 billion per quarter. 

Hell, if I had the money I’d bid for them myself!



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