After Google (NASDAQ:GOOG) acquired Motorola Mobility (NYSE:MMI) for $12.5 billion earlier this week, speculation has gone into overdrive that either Research in Motion (NASDAQ:RIMM) or Nokia (NYSE:NOK) could be the next takeover target — and that Apple (NASDAQ:AAPL) or Microsoft (NASDAQ:MSFT) might be the ones interested in this deal. Our earlier note titled After Google-Motorola Deal Are Nokia and RIM Next? discussed this topic when both Nokia and RIM’s stock gained more than 10% each as a result of Google paying a 60% premium to Motorola’s Friday closing price. However, we believe RIM does not look like a great acquisition target due to lack of strategic fit for potential buyers, a comparatively weaker patent portfolio and the fact that the company has rebuffed takeover talks in the past.
The market has clubbed the stock
RIM’s stock has declined from a peak of $70 at the beginning of the year to around $27 as of today, which is why many believe that the cheapness of the stock makes it a good acquisition target. While our $43 price estimate for RIM stock is supported buy our optimism that RIM will be able to turnaround its fortunes in 2012 with the roll out of QNX based smartphones, anything short of a massive turnaround could mean RIM is toast.
Why RIM still is not a great acquisition target?
- Lack of strategic fit: After Google acquired Motorola Mobility, the potential acquisition targets for RIM could be Microsoft and Apple. However, we believe none of the companies would find RIM to be a strategic fit. Microsoft is already into a partnership with Nokia in which its Windows Phone 7 operating system will power Nokia’s smartphones. Apple, unlike Google, already excels in hardware and software integration and would not need another hardware vendor in the name of RIM.
- Not enough patents: Mobile phone patents is a key trend these days with every company trying to boost its patent portfolio in order to deter others from suing it for patent infringement. Google has categorically said that the main motivation behind its Motorola acquisition was the rich trove of patents that Motorola possesses, which has over 17,000 granted patents and approximately 7,500 pending patent applications.  Unfortunately, RIM possesses only around 2,000 patents, which doesn’t make it a great acquisition target based only on the number of patents. 
- Company not interested: RIM plans to slowly phase out BlackBerry operating system and is betting big on its next generation super phones based on QNX operating system. It plans to release these phones next year, and hence is not looking for a partner. Even in an unlikely scenario of hostile bid on RIM, the Canadian government may present another roadblock.