'Slowing Momentum' at Research in Motion; Stock Falls

Okay, so now it looks like a trend: Canaccord Adams analyst Peter Misek cut his target price and EPS estimates for Research in Motion (RIMM) citing “a potential slowdown in momentum.” The call follows a downgrade by Morgan Keegan Monday, and negative comments Friday by Piper Jaffray.

Misek made his comments in the wake of a survey of telecom carriers, retailers and partners. “While our survey results provided continued positive outlook on RIM, it has indicated a potential slowdown in momentum,” he says. “Hence, we have made a number of changes to our forward expectations,” with the most material changes in the fiscal years ending February 2009 and 2010. He now sees ‘09 revenue of $8.7 billion with GAAP EPS of $3.64, down from $8.8 billion and $3.76; for ‘10 he cut his outlook by $1 billion at the top line to $10.7 billion, with EPS down 67 cents to $4.82. He price target goes to $145 from $160; he maintains a Buy rating, but yanked the stock from the firm’s Best Ideas list.

For FY ‘08 he actually nudged up his revenue expectations a tad to $6.02 million; GAAP EPS stays at $2.24.

“We continue to believe that RIM shares should be a core holding, but believe that some of the prior momentum may have declined,” he wrote.

Misek wrote that the number of respondents who believe that BlackBerry is gaining market share has declined slightly to 74% compared to 81% last quarter. The number of respondents that believe that BlackBerry shipments have grown over 10% sequentially also declined, to 54%, from 67% one quarter earlier.

Misek says RIMM is tracking to 4 million shipments and 1.65 million net subscriber adds in the November quarter, ahead of guidance of 3.7 million units but in line with 1.65 million net sub adds. In fact, he raised his outlook for the quarter: he sees $1.71 billion and 64 cents, up from $1.66 billion and 62 cents.

Research In Motion fell $3.25, or 3.1% Tuesday; the stock is down another 42 cents after hours to $101.08.

Comments

[Tom B]

The expected decline begins. RIMM will look pretty ugly when the iPhone app SDK hits the street.

[brewer]

Face facts, blackberry is 90's tech, plain and simple.

[Just the facts, just the facts]

Eric,

Do you think that Peter Misek listened to Jim Balsillie's presentation to ScotiaCapital's Telecom & Tech conference on November 20? In response to a question regarding whether RIM is experiencing any kind of market related slowdown, and any effect from a slowdown in sales to the financial sector, Balsillie responded that whatever financial sector slowdown may be occurring is dwarfed by the effects in international markets. Morever, as long as job growth contnues, BB sales to enterprises will continue. Does anyone have any idea about sales of BB at retail? IPhone is doing well at retail, but sales to enterprises are a future event - not current.

Misek also throws in the word "potential" slowdown in momentum. Usage of that word qualifies him for a "weasel" award. Either he has done the channel checks, and can say there is a slowdown, or he has not done the work. Moreover, did any of his surveys include sales to any country beyond Canada (as he is located in Toronto)?

Moreover, it would be nice to get some objectivity from the journalist.

[bert]

If RIMM beats guidance for the fourth quarter, as Misner predicts, price should get a boost on the 20th. Swings tend to go to irrational extremes. On the downside positive news is ignored. For example, there was no gain when VIP and MBT announced they were offering the Blackberry. Next year as most companies have slow growth RIMM will continue to gain in revenue and EPS along approximately the same trajectory as originally assumed. I did sell some RIMM for AAPL, but am waiting for price to dip a bit more and then I hope to load up. I am not concerned about upcoming earnings. Lets see.