Will Storm’s Delays Hurt RIMM’s Q3?

I know you’re probably on Blackberry Storm overload by now - but please indulge me once more. Last month, I asked all of you whether I should go iPhone or wait for the Storm. Overwhelmingly, you all told me to wait for the Storm, that it would be a game-changer. And so I did.

But, today, I don’t have one. By the time I got to a retailer late Friday morning, they were all sold out. Now, the supply has become an issue over a software glitch that’s being corrected. That’s kind of funny to me because, when I put a call out to Verizon Wireless a few weeks ago trying to get a launch date for the Storm, I was told the reason they don’t tie themselves to a date until the last possible minute is because they don’t want to get caught up in making a promise they can’t deliver on. Yet, that’s exactly what happened. Now, with an inventory problem on their hands, it looks like mid-December before another round of Storms will become available. Having them on shelves before Black Friday doesn’t look too promising now, does it?

Which leads me to the next point: Research in Motion (RIMM), the maker of the Blackberry, was, no doubt, hoping to get those Storms sold and log those buyers as subscribers before the end of its third quarter on Nov. 29. Now, given the problems, we’re not really looking at big subscriber numbers for Q3 - and that’s prompted Citi’s Jim Suva to trim his estimates for subscriber growth, revenue, and profit, according to Silicon Alley Insider. He now expects RIM to report 2.7 million net subscriber additions in Q3, instead of the previous estimate of 2.9 million. Likewise, he now expect sales of $2.85 billion instead of $2.96 billion and an EPS of 85 cents, instead of 91 cents.

Meanwhile, JPMorgan analyst Paul Coster told clients in a note that the Storm has been greeted by “unambiguously strong consumer demand that has outstripped supply,” a positive comment that prompted shares of RIM to rise Monday, up more than 3 percent so far.

Comments

[Hayweed:]

The stock only closed up $0.42 which is less than 1% in comparison to Apple up 12 % and the Nasdaq up 6.33%.

Rimm counts a sale as a delivery to the carrier not to the ultimate user. My guess is that Verizon who never shows the phone being used (unless the video is simulated) knows that the phone has software issues. 8 of the 12 reviews I saw said it was disappointing. I used one live at Circuit City but Best Buy had no demos. They did have a video screen tv showing it being used and it looks like the software is quick. My test though and many reviewers notes that the software hangs and locks ups a lot.

Verizon must have ordered a small initial volume and sold them all. Now that the must have blackberry fanboys have bought their phones, can they sell anymore is the big question.

2008 Nov 24 05:54 PM

[jenny:]

I'm so pissed about this. Not only had I been trying to track down the actual release date but then RIMM cant even get it together to supply enough phones. It's frustrating and bad business- you don't create a demand that you can't keep up with. At this point I'm almost over it..and I know a lot more people are going to be feeling the same way come mid December. Sentiment was becoming bullish for RIMM but recently flat lined (predictwallstreet.com/...) most likely because of this Storm debacle. Im bearish on RIMM right now, they're kinda blowing it.

2008 Nov 25 01:16 PM