Will RIM Warn Ahead Of Quarterly Earnings Report?

| About: BlackBerry Ltd. (BBRY)

By David Berman

Just when you think that all of the bad news has been built into the share price of Research In Motion Ltd. (RIMM), along comes a skeptical take from an analyst and the share prices falls. A lot.

In Thursday trading, the shares were down more than 4 per cent, with the decline presumably related to an update from Peter Misek, an analyst at Jefferies. He trimmed his target price on the stock to $12 from $15 and reiterated an “underperform” recommendation. Perhaps most worrisome, he argued that there is a 50-50 chance that RIM will warn ahead of its scheduled fourth quarter earnings report on March 29 that things aren’t so good.

As my colleague Iain Marlow reports:

Mr. Misek has lowered his estimates well below the Street’s consensus based on checks and surveys that indicate RIM won’t live up to its previous guidance. He now says he expects RIM to sell only 10.5 million units and pull in $4.2-billion in revenue, compared to RIM’s guidance of nearly 12 million units and between $4.6-billion and $4.9-billion in revenue.

The problem should hardly come as a shock: Mr. Misek believes that RIM’s higher end BlackBerry sales are suffering at the hands of the Apple iPhone and Android devices, especially those from Samsung. And low-end sales in North America, Europe and Latin America are deteriorating.

RIM had been enjoying some positive momentum until recently. It brought in new board directors and top management, signalling a willingness to shake things up. It also attracted some wily new investors: Fairfax Financial Holdings Ltd., which is led by value investors Prem Watsa, recently doubled its holdings to 26.8 million RIM shares; and Greenlight Capital, headed by hedge fund manager David Einhorn, recently initiated a position in RIM with a 2.9 million share purchase in the fourth quarter.

RIM shares had been up as much as 13 per cent year-to-date in mid-January, reflecting some optimism after a long, harrowing share-price slide. Now, they are down 5.9 per cent in 2012 – and are just 9 per cent above their low touched in December.

Disclosure: None