Could This Be Carl Ichan's Next Investment?

Rumors hit this morning that Carl Ichan, the legendary activist investor was looking to take a stake in Research in Motion (NASDAQ: RIMM).

With weak management, continued earnings disappointments, and a potentially dying brand, the question is why?

Nothing is confirmed just yet, but it could be the "p" word: Patents.

After the company reported earnings a couple of weeks ago, it was very clear that the company management, led by CO-CEO's Jim Balsillie, Mike Lazaridis needed to do something drastic to try to compete with the likes of Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), or eventually go the way of the dodo bird.

In the press release, Balsillie was clearly in denial about external pressures the company is facing. "We successfully launched a range of BlackBerry 7 smartphones around the world during the latter part of the second quarter and we are seeing strong sell-through and customer interest for these new products. Overall unit shipments in the quarter were slightly below our forecast due to lower than expected demand for older models," said Jim Balsillie, Co-CEO at Research In Motion in the press release.

"We will continue to build on the success of the BlackBerry 7 launch to drive the business as we focus our development efforts on delivering the next generation, QNX-based mobile platform next year," Balsillie went on to say.

With the increased importance that patents are playing in the smartphone and tablet world, it would make sense that Research in Motion's patents is something that is very attractive to Icahn. However, in a recent analyst note, Jefferies was not as optimistic on the patents, saying they are only worth about $1 billion, according to their analysis.

This is not the first time we have seen RIM be the affection of an activist investor, particularly for its patents. Earlier in September, little known Jaguar Financial made headlines about wanting RIM to explore strategic alternatives for the company, including its patent portfolio.

Nothing is certain, and the rumors this morning that Ichan filing a stake in the company later today may prove to be fruitless.

Something better happen soon though if the company wishes to compete in the long run with the "fruit company."

ACTION ITEMS:

Bullish:
Traders who believe that Carl Icahn will agitate RIM might want to consider the following trades:

• RIM is trading at an absurdly low five times 2012 earnings. If there is anyone who can unlock shareholder value, it is Icahn. Traders may want to consider initiating positions in RIM.

• This could also be beneficial for InterDigital (NASDAQ: IDCC), which is currently in talks to potentially sell itself for its patents. If Icahn can show the value of the patents, this could be beneficial for patents in general.

Bearish:
Traders who believe that Icahn is not going to be successful with RIM may consider alternate positions:

• If Icahn either does not get involved in RIM or can not get something accomplished, then perhaps RIM will eventually see time pass it by. Traders may want to short the name or buy puts.
  
  

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