Bear Stearns analyst Andy Neff sent the following earnings preview on Blackberry maker Research in Motion (RIMM) to clients:
Thursday 6/29 @ 5:00pm ET: RIMM 1Q07 EPS after market close – expecting results in-line with our above-consensus estimates but will net sub adds rejuvenate?
Pre-options EPS of $0.67vs. $0.56 a year ago (First Call is at $0.65) – revenues of $610mm, up 34% YoY, (First Call is at $602mm) on total net sub adds of 675,000. While we expect RIMM to report in line with our above-Street estimates and provide guidance in line with our below-Street estimates, key issue for RIMM is whether its net sub adds growth rate will rejuvenate.
While RIMM also faces competitive challenges, we believe that RIMM is more insulated in the near term given 1) its proprietary software/services business (i.e., needs BlackBerry handsets to get BlackBerry service) and 2) RIMM’s ASP is already at similar levels to its competitors (i.e., $350). However, as a proprietary solutions provider, RIMM does face long-term challenges from emerging device-agnostic, standard-based solutions from Microsoft, Good Technology and others.
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