Now before this becomes an argument board for every Research in Motion (RIMM) lover and hater, let me point a few important things out. First, I receive zero compensation from third parties (just compensation from Seeking Alpha for page views) for writing this. Second, I have no positions in RIM and have no plans to make any investments (long or short) until after I see the sales, guidance, and earnings figures after the conference call on 09/15/2011.
Lastly, these analyst actions, quotes, and opinions were given to private clients in private notes. Therefore, I cannot provide direct links to these quotes. However, these actions and quotes are public knowledge and if you search RIM on Google Finance you will be able to find more information.
I would like to focus on some interesting news regarding analyst reactions for RIM recently. At UBS, in a note to clients, analyst Amitabh Passi stated:
RIM's two main pillars of growth are increasingly under attack, and we continue to believe the status quo will likely be only good enough to keep RIM in the game, but will not meaningfully slow its competitors.
That statement tells me that international growth and the enterprise space are seeing growth issues. I suspect international growth and enterprise are suffering not only because of the explosive growth of Android and the iPhone, but also due to the global macro concerns. The world is currently in a slowing state (not recession) with less consumer spending and less consumer confidence. I also believe that China will continue to slow, however, Chinese consumers will still have substantial income to spend.
As consumers have less discretionary income across the globe most devices that are considered luxuries will take sales hits. Enterprise sales are likely slowing or seeing increased pressure due to most firms attempting to cut back spending. As corporations become more frugal it may be more in their interest to adopt cheaper alternatives. I openly admit I am unfamiliar with the RIM enterprise product line, but it is my general understanding that RIM is not a provider of discount enterprise products.
I think PlayBook sales will suffer over the longer term due to increased competition. This leaves RIM with only two options; revolutionize the product or cut its price while reducing margins. RIM only reveals the number of PlayBooks that have shipped and not the figures for how many are actually sold. I took it upon myself to ask several customer service employees at several electronics stores about sales and the response was generally the same. Consumers continue to be purchasing the iPad (most of the time) or the Galaxy tablet if they can afford it, and if they can't they purchase a cheap tablet utilizing Android.
James Faucette of Pacific Crest says, "After refreshing its entire handset lineup in late August and early September, our sell-through checks indicate that sales so far have been disappointing.” I tend to think he is correct not only because of the macro economic environment, but also because of the hype associated with the fast approaching iPhone 5. Amongst my friends it seems that they can't wait to get their hands on it.
Apple (AAPL) continues to provide great innovation and an excellent product line. Now, with the recent news of the iPhone being carried on Sprint's (S) service as well, I think we will see a contraction in the number of BlackBerry's that are purchased through Sprint (S). Peter Misek, of Jefferies, downgraded RIM on Friday with a sell citing "lackluster" sales of the new BlackBerry 7 models. Misek is quoted saying,
We believe the phones QNX are being rushed and features stripped. Most importantly, the integration of BES/BIS email/calendar is proving difficult, and we think a QNX phone without these would be a disaster.
As I look at RIM from the "outside of the box" perspective, I am seeing some significant issues. I think unless QNX is an overwhelming success, which is possible, I think RIM is going to be under pressure. International growth is becoming a problem, the enterprise area will see unimpressive sales in my opinion, and the handset segment will see increased competition and a lack of innovation.
It would appear to me that many traders and investors are either cashing out their gains they received thanks to the rumor about patents and companies like RIM being a target for takeover. If that is not the case the only other reasoning why RIM is down 3.64% over the last 5 days while the Nasdaq Composite is up 1.48% is because investors have grown tired of under delivered and/or undelivered promises by RIM.