Overeager investors jumped all over rumors Wednesday that Research in Motion (NASDAQ: RIMM) has been attracting potential buyers, pushing shares up nearly 13%.
RIM's stock reached as high as 14.14 in early trading, or 12.9% above Tuesday's closing price of 12.52, just 7 cents above an eight-year low of 12.45.
The Wall Street Journal on Wednesday reported that Microsoft and Nokia "in recent months flirted with the idea of making a joint bid" for RIM.
Also Wednesday, Reuters reported that Amazon.com had briefly considered acquiring RIM last summer.
Given the freefall of RIM's shares this year, it's understandable that Wall Street would respond positively to seemingly good news -- namely, that someone might actually want to buy the Canadian company and salvage some of its lost share value by paying a premium price.
But it appears things didn't get past the talking stage in either case. Which leaves RIM where it was on Tuesday: With slumping market share, declining sales, product delays, product misfires -- and no credible strategy for turning things around.
Yet investors spiked RIM's shares in early trading, as if the story changed for the better.
The truth is, it may actually get worse.
RIM's board wants co-chief executives Mike Lazaridis and Jim Balsillie to focus on trying to turn around the business through the launch of new phones, better use of assets such as BlackBerry Messaging and restructuring, two sources said.
And from the WSJ:
After appearing to close the door on a major strategic shift any time soon, RIM is now considering several smaller moves aimed at appeasing livid shareholders and buying time until it rolls out its next-generation BlackBerry.
Does this sound like a board and management team responding to a crisis? Wouldn't it be reasonable to suggest that RIM is in a crisis situation?
Yet the board is willing to allow the two co-CEOs who brought RIM to the precipice of disaster to remain at the helm, and also would like them to try harder. Because Lazaridis and Balsillie have a whole lot of great "tinkering" ideas that should shut up the whiny shareholders for awhile. Until the next-gen BlackBerry comes out and takes over the world.
At least Nokia CEO Stephen Elop knew he was standing on a burning platform.
RIM's board is scheduled to deliver recommendations next month regarding the structure of RIM's management board of directors. Right now Lazaridis and Balsillie serve not only as co-CEOs, but as co-chairmen of the board.
If the board recommends preserving the status quo -- or anything close to it -- then we can conclude that it's stuffed with incompetents and lackeys who are unable or unwilling to acknowledge the disaster unfolding on their watch.