Courtesy of Karl Denninger, The Market Ticker
When you're in trouble and the underdog there is only one good path available to you as a corporation – break the glass.
What I mean by that is to take actions that are outside the orthodoxy: calculated risks that change the market dynamic.
The reason to do this is that the current market dynamic is not supportive of your efforts — if it was you wouldn't be in trouble! Therefore, you either change the dynamics or you die — maybe slowly, but with certainty you die.
Sprint did this by opening up their prepaid service to higher-end phones. I called for it, they did it, it's showing up in results along with the rest of the actions they've taken. They broke the glass and their stock price has doubled.
I have urged RIMM to "break the glass." Specifically, I believe they should open their "new" ecosystems to Android applications. So far….. no movement.
But today rumors emerged that Samsung might have an interest of some sort in the company.
If there is anything to this — if it's not just some hedgies or game-players starting rumors after buying a bunch of stock to flip for a quick profit — then this is exactly what I'm talking about.
A device — or devices — that would run both Android and native BB10 applications seamlessly at the same time under QNX would be a paradigm-changer.
Samsung would gain the advantages of a real no-BS real-time operating system with its superior power and task management on its devices. It could choose to either simply base Android on top of that, or it could choose to use and refine the existing capability to run Android apps on the upcoming BB10 release.
Neither would be particularly difficult.
Considering how Samsung is literally destroying everyone else in the Android handset market were they to do something like this it would be the sort of "stake through the heart" move that I would expect to cement their position as the pre-eminent Android handset maker. They would gain an advantage that would be difficult if not impossible to supercede in the marketplace.
Let's assume that to get RIMM's board to bite on this they'd have to pay a 50% premium to today's market cap. That's $11.50/share, and about $6 billion in cash.
That's quite a bit, considering that the firm only has ~$20 billion in cash now. But using the firm's stock as currency it's only 4% of Samsung's market cap — to lock in an advantage for itself to exploit and block anyone else from doing so.
I think there might be something to this one, if only because the numbers work and so does the technology fit.
I'm usually not much for rumors that sound like BS, but this is exactly the sort of move that RIMM needs to make. The biggest risk is simply that they're too foolish to recognize that they need to do something paradigm-changing into what is otherwise a deteriorating business model and a market that has passed them by.
Disclosure: The author has a speculative position.