RIM's Q1: What to Look For

Research in Motion (RIMM) delivers its first quarter results Thursday and most analysts expect strong financials, but questions remain about the company’s ability to fend off rivals without sacrificing profit margins.

Wall Street is expecting RIM to report earnings of 94 cents a share on revenue of $3.5 billion. In its fourth quarter, RIM projected earnings between 88 cents a share and 97 cents a share.

Here’s a look at the key factors in the quarter:

Shipments and gross margins: Deutsche Bank expects RIM to ship 7.88 million units with gross margins of 43 percent. RIM’s average selling price is expected to be $350.

RIM’s roadmap: Caris analyst Robert Cihra expects RIM to remain on an “evolutionary not revolutionary path in terms of its models. Cihra writes:

We continue to get feedback from GSM operators that RIM keeps pushing more EDGE models at them, and while this could risk being too “evolutionary” vs. revolutionary, we think it reflects a strategy to drive lower-ASP units (e.g., we estimate $329 ASP by FQ3) but while also cost-optimizing using more established platforms. Looking over the next couple quarters, we expect better margin profile in upcoming models like the Tour (i.e., leveraging Storm’s innards but without touchscreen) and a potential wildcard in the low-end/priced, but likely still-decent margin EDGE based Curve 85xx/Gemini, which we actually expect to be both explicitly cost optimized and perhaps RIMM’s first to specifically target prepaid markets.

The outlook: Most analysts are expecting RIM to top estimates and raise the outlook for the second quarter. Wall Street is currently expecting RIM to report second quarter earnings of 99 cents a share on revenue of $3.67 billion. Deutsche Bank analyst Brian Modoff wrote in a research note:

Our concern as we move into the backhalf of the year is increasing competition in the smartphone market from existing players such as Apple, Palm, and Nokia, as well as multiple launches (at least 12 different devices) on the Android platform from vendors such as Motorola, Samsung, HTC and LG. Further, carriers, such as AT&T, will be pushing for broader mobile data adoption by consumers via lower cost data plans enabled by cheaper smartphones with wholesale ASPs in the $200-$300 range, pre-subsidy. We believe this shift will cause increased pricing pressure in the sector should new devices from RIMM’s competitors prove appealing to consumers.

Can RIM drive units without Verizon’s buy one get one free promotion? William Blair noted that Verizon has shelved its two-for-one BlackBerry promotion. That’s likely to make RIM’s pricing more volatile since Apple (AAPL) is driving smartphone prices. It’s likely that RIM will have to hit the $99 price point.

What will RIM do with Dash? Analysts were also interested in RIM’s Dash acquisition. Dash, a GPS system developer, could give RIM the ability to network BlackBerry users together.

Comments

[JamesApple:]

Rim has lost the battles, it's a matter of time for Rim to lose the war. Radio Shack offers $0 upgrades for the far superior Nokia E71 and N95, almost every Radio Shack is sold out on Nokia, no one wants blackberries. Sold outs for the iPhone Gs before release. Hundreds of thousands on waiting list, same for the Pre. Many hot hot new releases lining up from 2009 to 2012 (companies like Nokia and LG, Samsung plans and pre-release their new models years in advance) all making customers salivate insatiably. Blackberry is going under with little doubt in people's minds.

Jun 18 11:01 AM

[Warm_Paw:]

We continue to get feedback from GSM operators that RIM keeps pushing more EDGE models at them, and while this could risk being too “evolutionary” vs. revolutionary, we think it reflects a strategy to drive lower-ASP units (e.g., we estimate $329 ASP by FQ3) but while also cost-optimizing using more established platforms. Looking over the next couple quarters, we expect better margin profile in upcoming models like the Tour (i.e., leveraging Storm’s innards but without touchscreen) and a potential wildcard in the low-end/priced, but likely still-decent margin EDGE based Curve 85xx/Gemini, which we actually expect to be both explicitly cost optimized and perhaps RIMM’s first to specifically target prepaid markets.

WTF?
Sounds like Bullshit to me!
People who know what they're talking about leave me informed, not bewildered.
I'll put my money in a stock that's totally transparent.
Not much into secrecy games.

Jun 18 11:08 AM

[EJL:]

This guy is a comedian.


On Jun 18 11:01 AM JamesApple wrote:

> Rim has lost the battles, it's a matter of time for Rim to lose the
> war. Radio Shack offers $0 upgrades for the far superior Nokia E71
> and N95, almost every Radio Shack is sold out on Nokia, no one wants
> blackberries. Sold outs for the iPhone Gs before release. Hundreds
> of thousands on waiting list, same for the Pre. Many hot hot new
> releases lining up from 2009 to 2012 (companies like Nokia and LG,
> Samsung plans and pre-release their new models years in advance)
> all making customers salivate insatiably. Blackberry is going under
> with little doubt in people's minds.

Jun 18 11:54 AM

[EJL:]

You are correct that you should not invest in RIMM if you don't understand the analyst comments. This is not "secrecy" but an attempt to explain RIM's strategy. All he is saying is that RIM can manufacture products cheaper if they use well established manufacturing platforms. Many, many, many carriers still don't have 3G networks and rely on GPRS/EDGE, which is what RIM is catering to outside of developed areas. They will still produce the more expensive advanced network models too, but those have higher bill of materials and as the products are newer, the manufacturing platforms are not as developed or efficient. This stuff seems to be pretty basic blocking and tackling.


On Jun 18 11:08 AM Warm_Paw wrote:

> We continue to get feedback from GSM operators that RIM keeps pushing
> more EDGE models at them, and while this could risk being too “evolutionary”
> vs. revolutionary, we think it reflects a strategy to drive lower-ASP
> units (e.g., we estimate $329 ASP by FQ3) but while also cost-optimizing
> using more established platforms. Looking over the next couple quarters,
> we expect better margin profile in upcoming models like the Tour
> (i.e., leveraging Storm’s innards but without touchscreen) and a
> potential wildcard in the low-end/priced, but likely still-decent
> margin EDGE based Curve 85xx/Gemini, which we actually expect to
> be both explicitly cost optimized and perhaps RIMM’s first to specifically
> target prepaid markets.
>
> WTF?
> Sounds like Bullshit to me!
> People who know what they're talking about leave me informed, not
> bewildered.
> I'll put my money in a stock that's totally transparent.
> Not much into secrecy games.

Jun 18 12:03 PM

[JamesApple:]

to clear up a bit on the moneymaking jargon used by the carriers / retailers: they are trying to help Rim to clear out those old tech EDGE (old way of transmitting wirelessly, at least 3 times slower than today's newer ways) blackberries. Used to be Buy1 Get1 free blackberries, new deal is ComboBerries, 3 for $45 per month. It may sound cheaper but Rim is peddling garbage and you would curse Rim when you are using EDGE for wireless.

Rim is a low class vendor and sinking rapidly showing its true color trying to commoditize the smartphone masquerading its cheap cellphones as smartphones taking advantage of Apple and the unwary public mistaking those cheap blackberry cellphones as smartphones thinking they got a good deal in those blackberry giveaways everywhere. It's good that the public is finally waking up to these scams.

Rim is no Apple, nor Palm or Nokia. Rim is a scam. Rim's co-ceo's were charged and fined by the SEC. Rim had been sued and lost in a long string of lawsuit losses. Beware of Rim.

Jun 18 12:08 PM

[Kenan A.:]

People keep forgetting that the top selling handset for 2008 was a blackberry, the third top selling handset was also a blackberry. Iphone came in second.

RIM sold more units than apple. Sure you might say that Apple is just entering the field and to be selling more units than RIM for a quarter is an achievement. But that was the initial surge in sales that you get with a new product. Iphone 3g was a nice step up... but the last time I was in an Apple store, the "Genious" guy had a 2g. I asked him why. He said its got everything he needs and he didnt want to pay all that money for aGPS and a plastic body that breaks easily. Makes you think!

I was counting down the days for the new 3GS iphone. But like many others I was dissapointed. They added a lot of features to the iphone that have been around for more than 4 or 5 years by their competition. 3 megapixel? cut and paste? I dont know about you but I am not dishing out all that money to have a few extra features. I was hoping for a thinner, newer design. But all we got was some software and more memory. How many people need 32gigs in their phone. I havent used up 32 gigs on my Macbook air and I download music all the time.

RIM has done very well entering the consumer market while its competitors have not done well at all entering its Business market.

If you understood what RIM does with their encryption, compression and Enterprise services you would understand why RIM will not go down. Blackberrys use 1/20th the bandwidth of an iphone. That means they are way more profitable. An iphone Data plan is 30 dollars. A Blackberry Data plan is also 30 dollars. Except that a BB Data plan costs the telecoms 1/20th what an iphone would cost them on the network.

Notice how the latest iphone 3GS and 3.0 did not attempt in anyway to step into BB's realm. Sure they have some flimsy push service. Something that they brewed up just to say they have push. It recieved about 1 minute of airtime during their presentation.

Stop thinking Apple or Palm or HTC can catch up to RIM. RIM was built from the ground up based on compression, security and encryptian. RIM owns their own servers. Data sent on the BlackBerry travels on BlackBerry servers. They basically have the same architecture as Google running their servers on the backbone to offer faster speeds for your search. Well with RIM your data travels on RIM servers for better sercurity. Lets see Palm or Apple start deploying that kind of architecture.... hmmm maybe they should stick to the consumer market.

Have you looked at your neighbours kids lately.... they carry blackberry's. I bought my iphone from a 17 year old who wanted a blackberry instead. That was a shocker to me.

I love Apple... I own an iphone and do not own a blackberry. But when I do need one for work and grab one I forget how awesome these devices are for the business person.

Jun 18 12:15 PM

[JamesApple:]

Currently there are more than 550 phone models that run EDGE. Almost all of them are $0 models everywhere on the planet. I fail tosee any sense in this.

Jun 18 12:20 PM

[Kenan A.:]

Heres an article I just found backing up the idea that the new iphone 3gs is just a small improvement on the existing 3g.
----------------------...
Here’s an alarming thought for Apple (AAPL) investors, courtesy of long-time admirer Walt Mossberg, the Wall Street Journal’s closely read gadget columnist: For many iPhone users, upgrading to the new version of the iPhone OS might be such a nice improvement that they won’t bother to buy a new phone.

Mossberg has reviewed the iPhone 3G S as well as iPhone OS 3.0. He has positive things to say about both, and from his description of the 3G S, it really does offer improvement over the old phone in key areas like battery life, processor speed, image quality and the ability to shoot video.

But he also notes that the phone experience is considerably improved simply with the free upgrade to the new version of the OS, which adds cut-and-paste, improved search, landscape mode for e-mail, push notification and other features.

A key excerpt from the review:

In my tests, both the new phone and the new operating system performed well, with a few small exceptions. I believe the two strengthen the iPhone platform, make it likely the iPhone will continue to attract scads of apps, and are good for consumers.

But I also regard these changes as more evolutionary than revolutionary, and I don’t think this latest iPhone is as compelling an upgrade for the average user as the 3G model was last year for owners of the original 2007 iPhone.

Current iPhone owners can get an improved product by merely sticking with their existing phones and upgrading to the feature-laden new operating system, which is free (it costs $10 for iPod Touch owners), rather than shelling out at least $199 for the new iPhone 3G S. And many new iPhone buyers can opt for the $99 3G model, which is not only cheaper, but also greatly improved by the new OS 3.0.

And finally, Walt writes:
Bottom Line: Both the new iPhone and iPhone OS are packed with features that make a great product even better. But, for many users, the software may be enough of a boost to keep them from buying the new model.

If large numbers of people go that route, Apple has a big problem.

Jun 18 12:21 PM

[JamesApple:]

What runs on the blackberry servers (hardware) today is going to be a Windows or Mac Service (you can see it running as a process in the Task Manager) on Windows and Mac machines everywhere (even in a jungle in the middle of uninhibited Congo). You Rim customers are so archaic and tunnel visioned.

Jun 18 12:27 PM

[JamesApple:]

you would be stupid not to upgrade to the Gs. It's a world apart and better than the 3G.

Jun 18 12:29 PM

[EJL:]

1. much of the world still uses GPRS/EDGE technology, so it's not old, yet. do some homework.
2. are you serious? Apple execs backdated options too. don't you remember? When Fred Anderson (former appl exec) and Nancy Heinen (former apple legal counsel) paid huge fines. And when everyone was worried steve would be forced out? How quickly we forget.

This so clearly demonstrates how much of a buffoon you are JamesApple. will it ever stop?


On Jun 18 12:08 PM JamesApple wrote:

> to clear up a bit on the moneymaking jargon used by the carriers
> / retailers: they are trying to help Rim to clear out those old tech
> EDGE (old way of transmitting wirelessly, at least 3 times slower
> than today's newer ways) blackberries. Used to be Buy1 Get1 free
> blackberries, new deal is ComboBerries, 3 for $45 per month. It may
> sound cheaper but Rim is peddling garbage and you would curse Rim
> when you are using EDGE for wireless.
>
> Rim is a low class vendor and sinking rapidly showing its true color
> trying to commoditize the smartphone masquerading its cheap cellphones
> as smartphones taking advantage of Apple and the unwary public mistaking
> those cheap blackberry cellphones as smartphones thinking they got
> a good deal in those blackberry giveaways everywhere. It's good that
> the public is finally waking up to these scams.
>
> Rim is no Apple, nor Palm or Nokia. Rim is a scam. Rim's co-ceo's
> were charged and fined by the SEC. Rim had been sued and lost in
> a long string of lawsuit losses. Beware of Rim.

Jun 18 12:37 PM

[EJL:]

some intelligent things here


On Jun 18 12:15 PM Kenan A. wrote:

> People keep forgetting that the top selling handset for 2008 was
> a blackberry, the third top selling handset was also a blackberry.
> Iphone came in second.
>
> RIM sold more units than apple. Sure you might say that Apple is
> just entering the field and to be selling more units than RIM for
> a quarter is an achievement. But that was the initial surge in sales
> that you get with a new product. Iphone 3g was a nice step up...
> but the last time I was in an Apple store, the "Genious" guy had
> a 2g. I asked him why. He said its got everything he needs and he
> didnt want to pay all that money for aGPS and a plastic body that
> breaks easily. Makes you think!
>
> I was counting down the days for the new 3GS iphone. But like many
> others I was dissapointed. They added a lot of features to the iphone
> that have been around for more than 4 or 5 years by their competition.
> 3 megapixel? cut and paste? I dont know about you but I am not dishing
> out all that money to have a few extra features. I was hoping for
> a thinner, newer design. But all we got was some software and more
> memory. How many people need 32gigs in their phone. I havent used
> up 32 gigs on my Macbook air and I download music all the time.
>
>
> RIM has done very well entering the consumer market while its competitors
> have not done well at all entering its Business market.
>
> If you understood what RIM does with their encryption, compression
> and Enterprise services you would understand why RIM will not go
> down. Blackberrys use 1/20th the bandwidth of an iphone. That means
> they are way more profitable. An iphone Data plan is 30 dollars.
> A Blackberry Data plan is also 30 dollars. Except that a BB Data
> plan costs the telecoms 1/20th what an iphone would cost them on
> the network.
>
> Notice how the latest iphone 3GS and 3.0 did not attempt in anyway
> to step into BB's realm. Sure they have some flimsy push service.
> Something that they brewed up just to say they have push. It recieved
> about 1 minute of airtime during their presentation.
>
> Stop thinking Apple or Palm or HTC can catch up to RIM. RIM was built
> from the ground up based on compression, security and encryptian.
> RIM owns their own servers. Data sent on the BlackBerry travels on
> BlackBerry servers. They basically have the same architecture as
> Google running their servers on the backbone to offer faster speeds
> for your search. Well with RIM your data travels on RIM servers for
> better sercurity. Lets see Palm or Apple start deploying that kind
> of architecture.... hmmm maybe they should stick to the consumer
> market.
>
> Have you looked at your neighbours kids lately.... they carry blackberry's.
> I bought my iphone from a 17 year old who wanted a blackberry instead.
> That was a shocker to me.
>
> I love Apple... I own an iphone and do not own a blackberry. But
> when I do need one for work and grab one I forget how awesome these
> devices are for the business person.

Jun 18 12:43 PM

[Kenan A.:]

EJL, I didnt even bother responding to JamesApple.

I prefer to have discussions with logical people that prove their statements with facts.

what was that task manager comment anwyays? Are we even in the same league?

Jun 18 12:44 PM

[JamesApple:]

Rim cannot hold the candle to the Automated Teller Machines in encryption, transmission, security, stability, flexibilty. We use these ATM's for financial transactions in the trillions without a single problem since the 1970s. Rim can never have that level of security and robustness. Rim BES has so many security flaws and violations they are reported everywhere on Google. ATM transmission security and robustness make Rim BES look as safe as paper bags. President Obama is forbidden to use it, that's how unsafe the blackberry is.

Jun 18 12:52 PM

[JamesApple:]

This explains a lot....it seems we have people who wish for Apple to come out with EDGE phones. Why don't you get the China iPhone? That has EDGE. This is America, not some 3rd world developing nation. If people choose phones based on sales figures alone, buy the Nokia, it's a heck of a lot better than the ComboBerry. And yes, don't forget to knock on the Pre too. Do you have Rim shares?

Jun 18 01:00 PM

[JamesApple:]

The moment BES is replaced, Rim will RIP forever in grave.

Jun 18 01:05 PM

[EJL:]

Yeah, you are right. I just like to point out when he makes stupid statements for everyone to see. He has very limited understanding of the market. But it is helpful to point out his ignorance so others don't believe his crap.


On Jun 18 12:44 PM Kenan A. wrote:

> EJL, I didnt even bother responding to JamesApple.
>
> I prefer to have discussions with logical people that prove their
> statements with facts.
>
> what was that task manager comment anwyays? Are we even in the same
> league?

Jun 18 02:42 PM

[EJL:]

you didn't even get the gist of my argument. your ignorance is astounding.


On Jun 18 01:00 PM JamesApple wrote:

> This explains a lot....it seems we have people who wish for Apple
> to come out with EDGE phones. Why don't you get the China iPhone?
> That has EDGE. This is America, not some 3rd world developing nation.
> If people choose phones based on sales figures alone, buy the Nokia,
> it's a heck of a lot better than the ComboBerry. And yes, don't forget
> to knock on the Pre too. Do you have Rim shares?

Jun 18 02:43 PM

[Kenan A.:]

hahahaa, I was checking jamesapple's past comments. Check this one out!

"Hardware encryption using quantum physics performing device level biometric user identification and authentication can guarantee 100% foolproof autuhenticity. Quantum physics security cannot be cracked. However, the cost of implementing quantum physics based security can crack your bank account"

Jun 18 03:43 PM

[EJL:]

exactly. that's the case where large words are used to seem intelligent. there are some other gems if you go back far enough.


On Jun 18 03:43 PM Kenan A. wrote:

> hahahaa, I was checking jamesapple's past comments. Check this one
> out!
>
> "Hardware encryption using quantum physics performing device level
> biometric user identification and authentication can guarantee 100%
> foolproof autuhenticity. Quantum physics security cannot be cracked.
> However, the cost of implementing quantum physics based security
> can crack your bank account"

Jun 18 04:31 PM

[Frank Castle:]

The thing is people that understand what RIM provides to enterprise know there is nothing even close to it on the market. Everyone harking an iPhone solution has a nice GUI wrapped around the handful of Exchange ActiveSync policies and not much else. I can get 90% of the same with some powershell scripting and log parsing - that alone is why the BES is the standard anything else is judged by. Now I'd love for some product to equal that level of control, management and reporting but everyone else is like at BES version 2.0 and RIM just pushed out 5.0. The difference in functionality and features is staggering.

James is a clown and I shoot down all his drivel here, on fortune, businessweek etc. I doubt the man (child) has every owned a smartphone nor worked in a corporate environment. LIkely he's referring to Desktop Manager redirect and thinks thats BES.

I'm not Pro RIM or Pro Apple. I'm an informed IT professional who supports mobile platforms for a living. I work with this stuff all day, everyday and use an iPhone for fun and Blackberry for work. Apple is too damn paranoid to ever get to the level of RIM as they don't want to give up control or insight into what they will be doing 6 months to a year out. They live and breath for consumers and greta for them - their making a killing in that space and no one is denying some of the things they have done is fantastic.

RIM will be fine and have continued growth, agreements with every carrier on the planet as well a model for any budget so by default they will always be larger then Apple until iPhone can offer the same. Apple's made the 1st step with the $99 3G let's see the market reaction to it.

Jun 18 09:22 PM