RIM's Earnings Better than Expected, But Analysts' Reactions Mixed

Research In Motion Ltd. (RIMM) reported better-than-expected earnings in the first quarter, however analysts were generally mixed on the results as well as on the company's guidance for the current quarter.

The Waterloo, Ont.-based maker of the BlackBerry smartphone said it was growing market share (notably with retail subscribers), however, analysts say sales and profit estimates for the second quarter are under pressure from a sluggish spending environment in the U.S. and increasing competition.

Here's what some analysts had to say Friday morning:

Jim Suva, Citigroup Global Markets, has a Buy rating with price target of $100

Shares in RIM dipped nearly 8% in after-hours trading on Thursday evening before settling slightly down 1% as RIM's guidance being "a touch softer" than that so-called whisper numbers, Mr. Suva said.

We see opportunity here for fundamental buyers given pressure on shares from recent competitor downgrades and lofty expectations that have now been reset to obtainable levels.

Peter Misek, Canaccord Adams, reiterated Hold rating with a $95 price target

The Toronto-based analyst called the first-quarter results and second-quarter guidance from the the company "mixed." RIM was able to offset slightly weaker-than-expected shipments (7.8 million against estimate of 8 million) and new subscriber additions with improved operating margins, Mr. Misek said. In the current quarter, sluggish U.S. consumer spending this summer could bite into sales.

He wrote in a note to clients:

In the end, we saw nothing that changes our very bullish long-term outlook on RIM, especially with a series of impressive new product launches on the horizon. However, we are becoming increasingly concerned by the broader consumer electronics spending outlook. Our checks continue to suggest that the bounce we saw in early spring has begun to fade and, without the consumer tailwind at RIM’s back, we believe it prudent to remain on the sidelines.

Philip Huang, UBS Investment Research, left unchanged at Buy with $90 price target

Analyst noted that revenue, gross margins and subscriber additions were within guidance but failed to exceed high expectation on the Street. Earnings of 98 cents a share (ex-items) was largely attributable to lower operating expenses. Mr. Huang said the company's guidance for the August quarter was ahead of his own estimates though, subscribers additions of between 3.8 million and 4.1 million as new products like the Tour and carrier promotions offset slower sales season in the summer.

Mike Abramsky, RBC Capital Markets, reaffirmed Outperform and $100 price target

Mr. Abramsky, also quite bullish on RIM's longer-run prospects, noted that 80% of the 3.8 million new subscribers RIM added last quarter were retail or non-enterprise, which marks the "start of something big" in consumer smartphone adoption. RIM's core users have traditionally been corporate and government clients, but the new adds tipped the balance last quarter to half enterprise, half consumer.

"International growth and carriers shifting subsidies and promotions to smartphones — all to us signal a sharp rise in global smartphone demand," he wrote in a note.

Comments

[JamesApple:]

Rim made its mark on selling office-grade products and services to enterprises at jacked up prices thus earning juicy profits peddling junk. Times are tough now but Rim still try to peddle their office-grade products at jacked-up prices to the consumers, albeit with Verizin pitching in with BOGO subsidies for a while.

This scenario is similar to selling office-grade toilet paper at office prices to the consumers. The quality of the toilet paper is not that good, consumers would rather pay more for the softer 3-ply plush toilet paper than to buy those office-grade BOGO toilet paper.

Jun 19 03:23 PM

[well:]

alot of shorting going on that's what

Jun 19 04:09 PM

[droopydro:]

H
A ha ha


On Jun 19 03:23 PM JamesApple wrote:

> Rim made its mark on selling office-grade products and services to
> enterprises at jacked up prices thus earning juicy profits peddling
> junk. Times are tough now but Rim still try to peddle their office-grade
> products at jacked-up prices to the consumers, albeit with Verizin
> pitching in with BOGO subsidies for a while.
>
> This scenario is similar to selling office-grade toilet paper at
> office prices to the consumers. The quality of the toilet paper is
> not that good, consumers would rather pay more for the softer 3-ply
> plush toilet paper than to buy those office-grade BOGO toilet paper.

Jun 20 12:25 AM

[droopydro:]

Apple Dogs ,Me included, need a cat to chase:::::: chart those two
and except for this week I stand behind Rimm and jim BASILLE
vor prezidant of north America so I stand behind my HA ha ha.
Those two boys must be boys; fighting like cats and dogs but chart em an see who is the big dog an who is sharing the bowl boys
signed just another dumb consumer who can read a chart.

On Jun 19 03:23 PM JamesApple wrote:

> Rim made its mark on selling office-grade products and services to
> enterprises at jacked up prices thus earning juicy profits peddling
> junk. Times are tough now but Rim still try to peddle their office-grade
> products at jacked-up prices to the consumers, albeit with Verizin
> pitching in with BOGO subsidies for a while.
>
> This scenario is similar to selling office-grade toilet paper at
> office prices to the consumers. The quality of the toilet paper is
> not that good, consumers would rather pay more for the softer 3-ply
> plush toilet paper than to buy those office-grade BOGO toilet paper.

Jun 20 12:34 AM

[droopydro:]

Alot of shouting alot Rimm is the whipping boy
They announce triple earnings (2Q 08 or so) and they fell 20%in a day. they aim-- they fire--they split the arrow; and the sheriff says hang him. Jim B vor prezidant!
They announce they made more than predicted and expected and on less shipped and they get whipped. s'plain the pain
Cap"n Anyone. anyone?

On Jun 19 04:09 PM well wrote:

> alot of shorting going on that's what

Jun 20 12:43 AM