At $7 billion, Cisco should buy RIM now
The last 24 hours have been abysmal for Research in Motion as its shares lost nearly 10 per cent in one day almost matching its 52-week low of $12.45.
At the time of writing, the price of one RIM share in after hours trading is $12.92, valuing the company at around $6.8 billion and according to Bloomberg, the only communications-equipment maker with a market valuation bigger than $5 billion that sells at less than book value (Total assets value stands at $13.731bn). Even with a 41 per cent premium, RIM would still be a very attractive buy at just under $10 billion. But out of all potential suitors, one stands out amongst others cited; Cisco.
The networking giant has deep pockets with total assets of more than $87 billion; this war chest allowed it to buy nearly 150 companies over the last 20 years with four of them valued at more than $5 billion. There are clear synergies between RIM and Cisco; both are based in North America, their main focus is in the business/enterprise markets, both are telecommunication players and both are still market leaders in their respective segments plus they have worked/are working together (UC Manager, Flip-on-BlackBerry. Telepresence).
