Research In Motion Ltd (BBRY): Can Lenovo Really Buy Out BlackBerry?

Research In Motion Ltd (BBRY)Research In Motion Ltd (NASDAQ:BBRY) is one of the companies making headlines in the tech industry. Once a dominant force in the smartphones market, BlackBerry is slowly trying to get back on the right track after fading away in recent years. Apple Inc. (NASDAQ:AAPL)‘s iPhone and all the Android based smartphones knocked out BlackBerry, which led to the company having less than 5% of the market. However, a comeback might be near with BlackBerry’s latest smartphone offerings.

Research In Motion Ltd (NASDAQ:BBRY)’s stock rose nearly 8% after the company did fairly well in over 20 countries. Reports suggest that the sales have been good in several markets, with the Z10 expected to hit U.S markets on March 22. Thorsten Heins, BlackBerry’s CEO, was impressed with how the smartphone has performed is all markets. He claimed that the reception has been brilliant and the early signs suggest that the Z10 will be successful. Heins also said that both the operating system and the phone have been attracting people using other brands and platforms.

Can Lenovo really buy out BlackBerry?

There has been a lot of speculation that Lenovo might acquire BlackBerry. Yang Yuanqing, Lenovo’s CEO, made a statement that the company is looking for various external growth opportunities, including a buyout of BlackBerry. He claimed that the acquisition could make sense, but the company will need to analyze BlackBerry first. Lenovo already has a history in buying out product lines and other brands, including its successful acquisition of the ThinkPad product line from International Business Machines Corp. (NYSE:IBM).

The reason why Lenovo might be considering such a buyout is to boost its entry into the smartphones market. Lenovo does have some Android based offerings; however, there are just too many competitors within the Android smartphones market. An acquisition of Research In Motion Ltd (NASDAQ:BBRY) could help Lenovo get that market position which the company has always dreamed of. Also, most of Lenovo’s total revenue consists of PC sales; a market which is slowly fading away. An entry into the smartphones segment will not only help the company to grow further, but will also help the company to rely less on the PC market, which is declining. Lenovo’s ThinkPad acquisition is still seen as a successful deal and the ThinkPad line is one of the reasons why Lenovo has become such a major player in the PC market. Acquiring BlackBerry could help the company to become a major player in the smartphones market and compete against giants like Samsung and Apple.

Even though an acquisition might help Lenovo to expand in several different areas, a buyout won’t make sense financially. BlackBerry isn’t a small company and has a market cap of $7.8 billion compared to Lenovo’s capital of around $11 billion. Also, Lenovo’s cash balance of nearly $4 billion will not be able to buy out the entire company along with a premium over market value. However, Lenovo might just buy the software or the hardware and not the entire company. Whatever it is, we’ll have to wait and see how BlackBerry performs and whether Lenovo has any true intention of acquiring something from BlackBerry, if not the whole company.