JP Morgan Cuts Estimates on RIM - Again

Includes: BBRY, CERTF
by: FP Trading Desk

J.P. Morgan has again trimmed its estimates on Research In Motion Ltd. (RIMM) in response to the BlackBerry-maker’s third quarter profit warning and signs of a broadening global slowdown in mobile handset sales. However, analyst Paul Coster is maintaining an “overweight” rating and told clients that RIM deserves to trade at a premium multiple as a result of its leadership position in an open-ended growth market.

Based on RIM’s Dec. 3 profit warning, the analyst cut his fiscal third quarter estimates to align with the revised guidance. He now looks for the company to report earnings per share of $0.81 on sales of $2.75-billion. Mr. Coster is also forecasting unit sales of roughly 6.8 million in the quarter, average selling prices of $332 and net subscriber additions of approximately 2.6 million. He is not yet factoring in the potential acquisition of Certicom Corp. (OTC:CERTF).

J.P. Morgan’s estimates for fiscal 2009 through 2011 were also cut, with year-over-year unit growth in 2010 reduced from 42.7% to 32.5%. This implies unit shipments of about 37.7 million next year.

RIM reports third quarter results after markets close on Dec. 18.