After hitting a 52-week low on slumping sales, shares of Research in Motion Ltd. are on the rise, poised to advance on the NASDAQ Wednesday after surging in German trading on a report that Microsoft Corp. and Nokia Oyj are considering a joint bid for the struggling company.
There also was a report that Amazon.com Inc. considered buying RIM. But RIM, maker of the BlackBerry, is said to have turned down overtures from Amazon since the company is determined to repair current shortcomings on its own, according to a report from Reuters.
In U.S. trading Wednesday, RIM surged -- up more than 11 percent, or $1.42 per share, to $13.94 near 1 p.m. Eastern Time.
Late Tuesday, the Wall Street Journal reported that Microsoft and Nokia flirted with the idea of making a joint bid for RIM in recent months. Reuters and the Journal cited unidentified sources on the story. But RIM's shares jumped more than 10 percent in German trading Wednesday on the news. That's a big swing for trading activity throughout the year, as RIM's shares have shed 78 percent in 2011 due to increased competition from Apple's iPhone and declining sales.
A spokesman for RIM (NASDAQ: RIMM) declined comment on the reports.
At this valuation, it is a strong acquisition target, said analyst Sameet Kanade in an interview with Bloomberg, rating RIM a speculative buy. Kanade doesn't own the stock.
The challenges for RIM have been stiff. At one time its BlackBerry was among the world's most popular smartphones. But Apple's iPhone and other competitive products have caused steady erosion for BlackBerry in the past two years, leaving some to speculate that a buyout may yield RIM's highest value to shareholders.
Late last week RIM posted another drop in quarterly profit, sending its stock to a 52-week low in after-hours trading. But the drop in profit wasn't a big surprise to the market. Investors are concerned that RIM gave a dismal outlook for BlackBerry shipments during the Christmas holidays and said it is delaying QNX phones.
The matter that they turned in a bad quarter shouldn't come as a shock to anybody, John Jackson, an analyst at CCS Insight in Boston, told Reuters. I think the more important issue for RIM is that it is highly unclear exactly when they're going to be able turn things around.
RIM said it will ship just 11 million to 12 million smartphones in the weeks around Christmas, the first time in six years the company has experienced such a steep decline in the period.
Several firms downgraded RIM on the news. BMO Capital downgraded the company Friday morning to Market Perform from Outperform over concerns related to BlackBerry 7.0 sales and the delay for BlackBerry 10.0 devices. The price target was lowered to $15 from $26. And Citigroup lowered its price target to $12 from $15 Friday morning.
RIM's stock, which had been as high as $70.54 this year, closed on the NASDAQ Tuesday at $12.52, barely above its 52-week low of $12.45.
RIM did show a profit in the quarter ending Nov. 26. RIM earned an adjusted profit of $667 million, or $1.27 a share. But that figure does not include, according to Reuters, a large writedown on unsold PlayBook tablets or charges associated with the company's global services outage earlier this year.
RIM had revenue of $5.2 billion in the third quarter. Analysts were expecting RIM to earn $1.19 per share on sales of $5.65 billion. The company had warned on Dec. 2 that its earnings and revenue would be lower than previous expectations.
Despite the results spooking investors, RIM said in a statement it is more determined that ever to capitalize on our strengths to overcome the recent execution challenges surrounding product launches and the resulting financial performance.