RIM jumps on job cut reports, takeover talk
TORONTO (Reuters) - Research In Motion's shares rose around 10 percent on Tuesday as reports surfaced that it had begun cutting staff and rumors of a takeover swirled around the BlackBerry maker.
Shares of RIM, which once dominated the business segment of the smartphone market, have dropped more than 50 percent this year after a series of stumbles in the race to keep up with fierce competition from Apple Inc and others in the smartphone and tablet computer markets.
But shares of the Waterloo, Ontario-based company jumped $2.66, or 10.3 percent, to $28.55 on Nasdaq and C$2.33, or 9.2 percent, to C$27.74 in Toronto on Tuesday, bouncing back somewhat from what had been a 27 percent slide after it revealed dismal quarterly results and lowered its full-year outlook on Friday.
"It's a classic bounce off the bottom," said Colin Gillis, an analyst at BGC Partners in New York.
He said that reports that company began handing out pink slips to an unspecified number of its 17,500 workers globally, including 9,000 in the Waterloo region, may have helped. Local media reports said about 200 had been laid off in Waterloo.
"The talk was that they were starting to cut heads and if they can reduce costs faster than expected, that shows decisive action," he said.
A spokesman for the company could not be reached immediately to confirm the media report about layoffs, though RIM said on Friday it did plan to cut staff.
With the company's stock getting cheaper, takeover rumors have been surfacing in the market, and while Gillis said he's heard them, he said he does not believe they will pan out.
He said the company's management has been aggressive about buying back RIM's own stock, and that while company is worth less than it was at the beginning of the year, it still has a market cap of nearly $14 billion.
"And that's a lot of change to come up with."
John Jackson, an analyst at CCS Insight in San Francisco, said he thinks that there will be a lot more takeovers in the mobile market, and that RIM could be a target.
At the same time, he said, investors could just be betting that RIM will make it through the turbulence.
"I absolutely think there's a chance that RIM could turn it around and get back in there," he said.
"I also think there's a good chance that there's a lot more M&A activity that's going to happen in the market whether or not RIM is involved."