Microsoft Buy RIM? Don't Make Me Laugh

Last Updated Jun 22, 2011 9:38 AM EDT

Just a few days after Research in Motion (RIMM) announced particularly ugly quarterly earnings and then acted as though it hadn't even noticed, acquisition speculation is in the air. Will Microsoft (MSFT) buy RIM? Dell?

Any time a company runs into serious trouble, this sort of chatter picks up. The potential target is vulnerable and could be available at a bargain price. In this case, though, the speculation is off-base. Some of the rumored buyers want nothing to do with RIM, the price is too high anyway, and RIM's "co-CEOs" would rather die and take the business with them than admit someone else could solve a problem they couldn't.

Who's going to buy RIM?
For investors, at least, a takeover would be great. RIM's stock tanked after the earnings announcement, but jumped 10 percent on both the acquisition rumors and RIM's plans to cut an unspecified number of jobs -- the latter of which "shows decisive action," according to BGC Partners analyst Colin Gillis.

Yup. When you have no idea how to fix an ongoing issue, cut staff. It's perfect Wall Street logic. In this case, though, the rejoicing will be short lived.

For starters, forget the idea of Microsoft buying RIM. Microsoft didn't spend all that time and money creating Windows Phone and locking down a Nokia (NOK) partnership to purchase RIM's aging smartphone software and its newer QNX embedded operating system -- both of which compete with Microsoft's own offerings.

Dell would be a more realistic buyer. Having QNX would help offset HP (HPQ) having bought Palm for the webOS operating system. Dell could put QNX into all manner of peripherals and devices, plus it would have an existing, even if shrinking, customer base for the BlackBerry, PlayBook, and RIM's software services. There's just two problems: price and management.

It'll cost you a gazillion dollars
Both obstacles are tied to management ego. The first is price. Although once worth $83 billion, RIM's current market cap is $15 billion. That's still a lot of money. Could Dell pull it off? Probably. But why would it want to?

RIM has been slow to adapt to the smartphone market. In some ways, it's been even slower than Microsoft or Nokia, which at least has finally released a phone with its finally-ready MeeGo operating system. RIM won't be shipping BlackBerrys running QNX until sometime next year.

The company saw its first serious downturn in BlackBerry unit sales, and it expects the number to go even lower. Last fall, RIM stopped disclosing its subscriber numbers. Co-CEO Jim Balsillie claimed it was because of the increasing difficulty of forecasting the number. More likely, it was the rising level of embarrassment as the company failed to make its goals.

Over our dead co-bodies
Balsillie and co-CEO Mike Lazaridis have egos to rival Steve Jobs, but without the accompanying talent. They seem openly disdainful of criticism and have said that no one outside the company could possibly do as good a job. (That the same would be true for inside the company apparently goes without saying.)

Both share the position of board chairman, as well. There is simply no way they will consider an offer for RIM while they have even one customers left, because it would be a tacit admission of their failure. That means an acquisition has no chance of succeeding until RIM is in such dire straits that no other option is viable. At that point, the game will pretty much be over, anyway.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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