RIM Shares Rise on Icahn Stake Speculation

Tuesday, 27 Sep 2011 06:00 PM

 

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Shares of BlackBerry maker Research in Motion Ltd. advanced Tuesday amid speculation that billionaire investor Carl Icahn has taken a stake in the company.

Rumors that the activist investor was buying into the troubled smartphone maker caused shares to spike around 10:22 a.m. Eastern time.

Icahn is already set to cash in an 11.4 percent stake worth more than $1.3 billion in Motorola Mobility Holdings Inc., after Google Inc. declared it was buying the cellphone maker, mainly for its trove of cellphone patents.

The market is hoping that Research in Motion is next in line to be acquired.

Brigantine Advisors analyst Kevin Dede said he had heard rumors of Icahn taking a stake but couldn't confirm them.

Icahn and spokespeople for Research in Motion did not respond to requests for comment.

Research in Motion shares rose 97 cents, or 4.5 percent, to close at $22.65 on Tuesday, although they had been up as much as 8 percent earlier in the day.

Shares have been on an almost steady decline since hitting a recent peak of $70.54 in February and cresting slightly at $33.54 in early September.

Research in Motion is fighting to stay relevant amid two dominant mobile operating systems, iOS created by Apple Inc., and Google's Android, which it shares freely with handset makers. The company, based in Waterloo, Ontario, had dominated the corporate smartphone market but regular consumers have been drawn to phones with big touchscreens like the iPhone and Samsung Galaxy, which runs on the Android platform.

Earlier this month, Research in Motion shares plummeted nearly a fifth in one day, after the company reported a sharp decline in net income and missed analysts' estimates. It also sold fewer of its Playbook tablet computers than expected.

Research in Motion's prospects seem to be fading, as its competitors are shoring up their businesses. Google bought Motorola for its huge array of more than 17,000 patents related to cellphone technology to defend its Android system against a litany of lawsuits. Dede said Research in Motion does not have as strong a patent portfolio and therefore is not as attractive an acquisition.

Its latest phones running on the BlackBerry 7 operating system have had a lukewarm reception and Dede said he has doubts about whether its QNX tablet software platform will gain traction.

"I'm not saying (Icahn) made a wrong (decision) here. I just don't agree with it," Dede said.

The analyst maintained his "sell" rating on the shares with a $20 price target.

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