RIM Gains on Speculation Icahn May Buy Stake

Enlarge image Research In Motion Gains on Speculation Icahn May Buy Stake

A man uses a Research in Motion Ltd. Blackberry device while waiting in line for a new Apple Inc. store to open in the Conestoga Mall in Waterloo, Ontario, Canada, on Aug. 13, 2011. Photographer: Norm Betts/Bloomberg

Research In Motion Ltd. (RIMM), the maker of the BlackBerry smartphone struggling to revive falling sales, rose 4.5 percent on speculation that activist investor Carl Icahn is buying a stake in the company.

“This is a typical Carl Icahn scenario to come in and change,” said Sameet Kanade, an analyst at Northern Securities Inc. in Toronto who recommends investors sell the stock. “If he did this though, it would have to be on a hostile basis, given that the two co-CEOs own 11 percent of the stock.”

RIM has plunged 61 percent on the Nasdaq this year after earnings missed analysts’ estimates on slumping demand. Stung by customer defections to Apple Inc. (AAPL)’s iPhone and handsets that run on Google Inc. (GOOG)’s Android platform, RIM’s share of the global smartphone market fell to 12 percent last quarter from 19 percent a year earlier, according to Gartner Inc.

RIM, based in Waterloo, Ontario, gained 97 cents to $22.65 at 4 p.m. New York time on the Nasdaq Stock Market.

Icahn built his reputation as a corporate raider in the 1980s targeting companies such as Phillips Petroleum Co., Texaco Inc. and Trans World Airlines Inc. He more recently sparred with management at Motorola Inc. and Clorox Co. (CLX) He often spends years holding stocks as he waits for investments to pay off.

Strategy Push

“If he has taken a position, he may likely push for a board seat and compel the company to peruse value-creating strategies such as a sale of the company,” Mike Abramsky, an analyst at RBC Capital Markets in Toronto, said today in a research note.

Abramsky, who has a “sector perform” rating on the shares, said in July that the company could split into two, with one business continuing to build hardware and the other focused on supplying networks and so-called “cloud” Internet storage services to corporate customers.

Icahn had pushed for a board seat at Motorola and pressured the company into splitting into two, which it did in January. Last month, Motorola Mobility Holdings Inc. agreed to sell itself to Google for $12.5 billion.

The billionaire investor may look to keep RIM as one company to maximize its undervalued assets, said Michael Cote, whose consulting firm Cote Collaborative Inc. has advised Motorola and other U.S. handset makers and wireless carriers.

‘More Aggressively’

“They have an extensive intellectual property portfolio and they could use that more aggressively,” Cote said today in an interview.

The BlackBerry maker holds more than 2,000 patents, pertaining to everything from mobile security to e-mail, according to the U.S. Patent Office.

RIM’s data network could also have value beyond the transport of BlackBerry traffic, Cote said. In addition, cash generated from its monthly collection of BlackBerry services fees gives it “a reason why someone like an Icahn would be interested.”

Icahn and Marisa Conway, a spokeswoman for RIM, didn’t immediately return phone calls seeking comment.

RIM’s largest shareholders are co-Chief Executive Officers Jim Balsillie and Mike Lazaridis, who is also the company’s founder.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

Scott Moritz in New York at Smoritz6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net