Jefferies believes press reports that suggest Research In Motion Ltd. (NASDAQ: RIMM) is talking to Samsung are likely true.
However, while we see RIM as exploring many options we believe that a licensing of BlackBerry 10 is the most likely outcome. Due to a greater probability of the partnerships occurring, we increase our target to $17 from $13.50, said Peter Misek, an analyst at Jefferies.
Misek sees a licensing deal announced within the next three months with actual BlackBerry 10 handsets out in calendar fourth quarter. He sees this gaining momentum on the appointment of a new Chairperson of the Board.
The analyst sees Barbara Stymiest as the most likely person to become Chairperson of the Board. If she is appointed, the analyst expects a strategic review and ultimately a major hardware restructuring.
Misek sees RIM licensing BlackBerry 10 and charging $10 per device. He believes this is the main way RIM will be able to maintain its services revenues and build ecosystem momentum.
He believes Samsung and HTC would do this to gain access to the RIM subscribers base, diversify away from sole dependence on Android and create more enterprise exposure. BlackBerry 10 is effectively an Android derivative and therefore many bridges are possible.
Misek said licensing would devastate the hardware business; therefore a major restructuring would be required to right size the company. His best guess is that the licensing is, approximately, a 90 percent probability and that an outright sale of the company or hardware business is less than 40 percent likely.
Longer-term successfully restructured business valuation: if the hardware business is significantly restructured, if RIM maintains a 8 million to 10 million hardware unit quarterly run rate and if RIM successfully licenses the OS then we could see up to $25 of value. however, Misek still has not been able to assess the probability of all these events occurring.
What is clear to us is the value of the sub base and the world's largest private cloud combined with some patent value continues to provide support; however, near-term trends continue to be challenging so we maintain our Hold rating, said Misek.
RIM stock closed Tuesday's regular trading up 8.04 percent at $17.47 on the NASDAQ stock market.