RBC Analyst: RIM Can Withstand Smartphone Competition

Will 3G technology and new smartphone devices spark a food fight between Research In Motion Ltd. (RIMM) and Apple Inc. (AAPL)? Possibly, but don’t worry about RIM in the long run, RBC Capital Markets’ Mike Abramsky told clients.

“Although widely anticipated, the iPhone launch may offer headline risk to RIM valuation, but in our view will not harm RIM’s global franchise,” the analyst said in a research note. He considers iPhone-related weakness as an accumulation opportunity in shares of the BlackBerry maker.

While the 3G iPhone’s launch later this summer may offer a perceived interim threat to RIM in the lucrative consumer market, the company’s upcoming product cycle beginning this fall, which includes its touchscreen ‘iPhone killer’ (Mediaberry), a ‘Motorola-killer’ (clamshell) and possibly other consumer handsets should bode well.

Mr. Abramsky said:

The high-value Smartphone consumer segment is early and growing, offering room for RIM, Apple and Microsoft (MSFT), all of whom remain strong contenders, and whose offerings, pricing and positioning appeal to different users.

With these devices driving broader consumer and enterprise appeal, the analyst estimates that the global addressable Smartphone market is 100 million people in 2007, growing to 400 million by 2010 at a compound annual growth rate of 60%.

Investors should also be aware of an upcoming buying opportunity for RIM shares, Mr Abramsky noted. After a BlackBerry rival releases a competitive product, RIM’s valuation falls about 10% for the week, but needs about a month or two to recover on strong financial results, new products and a lack of feared competitive headwinds.

Mr. Abramsky maintained his “outperform” rating on RIM with a $150 price target.

Comments

[wallawallabingbang]

Whistling past the grayeyard, I think...

[User 172133]

may be a good product, but the stock has a bubble valuation.

$6bn in sales, valuation of over $70bn, like 2000 is back

[Apple Heavy]

Since his price target on RIMM is $150, then his target on AAPL should be $300, not the $220 he called yesterday.

[dig]

unfortunately, any company that has a product dubbed a "killer" is on it's way out. dangerous to own these overvalued shares long term, as the company is a one-trick pony.

[Apple Heavy]

...and if Apple were to license the iPhone version of the Mac OS to NOK, LG, & HTC, then RIM will be squeezed just like Dell is being squeezed by Apple, HP, Lenovo, and Acer.

[bryanz]

Smartphones are an expanding, not contracting marketplace. there's room for AAPL and RIMM to grow. Calling RIMM a one-trick pony is a bit short-sighted considering they've got the enterprise market eating out of the palm (no pun intended) of their hand, and the pearl and curve and forthcoming 9000-series are expanding their reach in the consumer market.

And RIMM isn't walking around saying "iPhone-killer"... that's analysts and reviewers trying to rev up the hype machine. AAPL and RIMM are two solid companies that have given me solid gains over the past couple months. And ppl predicting RIMM's demise... short the stock and put your money where your mouth is.

[Apple Heavy]

"... short the stock and put your money where your mouth is."
Thanks for the suggestion. Why didn't I think of this!
I agree with the comment that a $70b market cap for RIMM is a bubble valuation.