Opposing Views on RIMM's Future

Research in Motion (RIMM) may be facing serious headwinds in the face of a global slowdown, but two analysts – both of whom are lowering their estimates and targets – are taking opposite views on the company’s prospects.

Over at Raymond James, Steven Li has an “outperform” rating on RIM shares, though he is reducing his target price to $80 from $110, based on a price-earnings multiple of 18. That’s a 30% discount of the last five years average, trailing a P/E of 26 times, attributable to the “significant contraction in sector valuations.”

Mr. Li acknowledges that consumer spending has slowed down substantially, but “that said, we still expect RIM to gain market share in the slowing market.” Why? He points to RIM having its biggest product cycle ever, having launched five new platforms since August - Storm 9530, Bold 9000, KickStart 8220, Javelin 8900 and the 8350i for Sprint (S) iDEN network. This compares to just two main platforms shipping at this time last year.

Meanwhile, at UBS, analyst Jeffrey Fan lowered his global handset industry forecast, saying sales will decline 9% in  2009.

He said:

This reflects weakness driven by currency movements & macro weakness. We do not expect RIM to be immune from the weakening economy. Although consumers are unlikely to get rid of cellphones, they may be more cautious about adding incremental monthly data fees, which could slow sales.

Mr. Fan is maintaining his neutral raining on the stock, but lowered his price target to $50 from $71.

Comments

[mag:]

wo cares anymore about these analysts opinions? Citis cuts goldman, goldman cuts citi everybody cuts everybody. It is a recession, nobody is recession proof. I don;t have to any experience as an analysts and will tell you that rimm aapl ibm hp bb all will have lower sales so I am downgrading them all to neutral and reducing their price targets another 15%. What a joke these so called analysts. Fire them and you will do our economy some good.

2008 Nov 14 07:13 AM

[Hayweed:]

Went to the AT&T store last night and Rimm is definitely getting the short end on the marketing of the new bold. Apple has a prominent spot in the middle of the store with a giant lcd screen showing the iphone. The blackberries while at the very front of the store got no looks from any customers. Out of the ten peoplei watched not one asked about the Bold yet all looked at or inquired about the iphone. 3 of the 10 bought an iphone and 3 were referred to the Apple store but I am not sure why.

The AT&T Salesman said he liked the bold but that it was overpriced. He further stated that iphones were still selling really well.

The big day for Rimm is next Friday when the Storm goes on sale. If they have lines then Rimm may be ok. No lines for their consumer phone and you can put one more nail in the cofffin or $10 more downside prior to earnings.

2008 Nov 14 07:45 AM

[Hayweed:]

One more problem

Verizon Wireless has stores in Circuit City. In my city almost half of the AT&T stores are in Circuit City's which may not be in business much longer. 5 stores in Circuit City out of 13 stores.

The fact that Verizon is tied in with Circuit City also hurts Verizon as a brand. Also since the Circuit is in bankruptcy will they even have many phones in inventory. I cannot imagine that Rimm sold phones to the Circuit on the hope of getting paid back.

2008 Nov 14 07:50 AM

[mollytjm:]

and iPhones are doing very well at Best Buy too. AT & T stores send people to the Apple store when the customer wants their data transferred and it's complicated or when the customer has a computer/iphone situation. The AT & T people are very nice, but not computer experts.

smartphone contracts are very pricy, but not for what you get. as a society, we're getting addicted, very fast, to having info at our fingertips. i think the market for smarphones will keep growing, almost no matter what. i have one (an iphone) and would cut out a lot of other things before giving it up. i'm sure i'm not alone.

2008 Nov 14 11:21 AM

[kris23:]

Sentiment for RIMM has been relativley bullish the last month, only recently dropping to become bearish (www.predictwallstreet....) However, I think it could be a temporary dip with holidays around the corner. When I overlay the price quote over sentiment, I can see that even though the price is falling minimally now, people have remained somewhat bullish. I think between the Storm and other devices, RIMM could have a strong holiday season.

2008 Nov 17 02:43 PM