So, is Research In Motion (RIMM) in danger of suddenly looking behind the times in its phone designs?
GC Research analyst Tero Kuittinen raises that question in a research note this morning. While still bullish on the stock - he as an Overweight rating and $95 price target - Kuittinen writes that the current lineup is looking “a bit shopworn,” and asserts that the company appears to have made a decision to make incremental improvements in mid-range and and low-end models “instead of bringing advanced features aggressively to cheaper devices.”
The analyst notes that pricing on newer big display models like the Apple iPhone, the Palm Pre, the LG Cookie, the Nokia 5800 (NYSE:NOK) and Android-based HTC units has been “surprisingly aggressive,” and asserts that RIMM may have underestimated the rate of migration of the 3-inch touch-screen displays into lower price points.
He thinks results for the fiscal second quarter ending in August will be strong; he is modeling EPS of $1.02 a share, ahead of the Street at 99 cents. But he is cutting estimates for subsequent quarters: for FY Q3, he is down to 98 cents, from $1.22, and for FY Q4, he goes to $1.02, from $1.49.
Kuittinen says he is hearing “tepid” feedback on the 8230 flip phone model at Verizon; and he contends the new BlackBerry Tour is “extremely close to the aging Curve in look and feel,” and lack WiFi support.
“Overall, RIMMS’s expansion to flip phones is ill-timed, and the Tour line lacks kick and the low-end improvements are minor at best,” he writes.
“It is the combination of these three simultaneous factors that leads us to believe RIMM may have been lulled into complacency by the stellar success of the BlackBerry devices over the past couple of years. The years 2009 is a tough period to let your product development program spin its wheels.”
He does say that Storm 2 should debut at Verizon by October - but he adds that “one major big-display phone launch…may not fully offset the slight malaise afficting the rest of the BlackBerry range in the autumn.”
RIMM today is up $1.30, or 1.9%, to $70.60.