Research In Motion: Expectations Running High

Clearly, the Street is expecting Research In Motion (RIMM) to put up some very big numbers next Wednesday when the company reports results for its fiscal first quarter ended in May. The Blackberry maker’s stock is up for a fifth straight day, and has rallied well over 13% in the process; today the stock set an all-time high, and now sports a market cap of close to $83 billion.

Several analysts weighed in with pre-announcement comments on the stock today.

• Bank of America’s Tim Long today repeated his Buy recommendation and $160 price target. He expects the company to report May quarter revenue of $2.24 billion, with pro forma EPS of 85 cents, gross margin of 51.4%, operating margin of 29.8%, 5.3 million new units, 2.24 million new subscribers and an ASP of $345.74. For the August quarter, Long expects $2.37 billion in revenue and EPS of 92 cents, with 5.6 million units, 2.45 million net adds, gross margin of 51.4% and operating margin of 30.7%.
• Nomura’s Richard Windsor, who has a sell rating on the stock based on valuation, nonetheless said today that the fundamental outlook for the company remains good, with “another strong quarter in the making.” He sees Q1 revenue of $2.2 billion, with 5.2 million units and 2.2 million new users. Looking ahead, he contends Q2 Blackberry demand will be unaffected by the Apple (AAPL) iPhone and other smartphone competition. Windsor says the iPhone’s functionality “falls woefully short of what RIMM and Microsoft (MSFT) can offer,” but that it may attract users from small companies where users have more freedom to choose their own devices. Windsor says he would advise investors to buy HTC or Qualcomm (QCOM) rather than RIMM.
• FTN Midwest’s Blaine Carroll repeated a Buy rating on RIMM today, and set a $170 price target. “Over the past several months, our survey results have yielded strong demand for RIMM’s products in the U.S. market,” he wrote in a research note. He’s looking for $2.26 billion in revenue and 85 cents a share in the May quarter, and says guidance could be slightly ahead of the consensus. “We continue to believe that the smartphone market will post continued growth and we estimate that RIMM will grow its revenue in the 40% range and grow earnings at a much faster rate,” he writes.

Comments

[Hayweed]

Rimm may have a lock on the enterprise but last quarter over 50% of their new subs were consumers. The new iphone will put a big dent in the consumer sales of Rimm phones. Why else would rimm be advertising the on tv about their phones if they weren't worried about the iphone.

The next 3 quarters will see Rimm stuff the channel as their consumer phone sales slow. If the data rate is the same do you really want a pearl at $100 or an iphone at $199. The iphone does 5 things well (phone, internet, music, video, and email) the Pearl does email and phone.

Lastly, Rimm has a market cap of 1/2 of AAPL and 40% of Google. Is that ridiculous or what

[bryanz]

I think one of the major issues with the iPhone is that you're tied to AT&T. Lots of people don't like the idea of being tied a carrier no matter how cool their phones are. Back when they were Cingular I had some pretty crappy customer service experiences with them and promised myself I wouldn't give them my money anymore. I switched to T-Mo, their customer service is great, coverage is pretty good, and even with my Blackberry plan my minutes are still cheaper than a standard plan from AT&T. A phone that loads the national geographic website in 19 seconds, no matter how slick, isn't enough to convince me to go back to them.