RBC Capital is out with a somewhat cautious call on Research in Motion (RIMM) saying new data points suggest AT&T (NYSE:T) may launch the 3G Blackberry Bold mid-August, a 2-3 week delay to their prior launch estimate, as it continues to stabilize the device on its HSPA network. Rogers (NYSE:RCI) appears on track for July launch, and other carriers (Vodafone (NASDAQ:VOD), DoCoMo (NYSE:DCM), TIM, O2, others) are still expected later in August.
Revised Q2 Guidance: As discussed in their Q1 preview, Q2 guidance is highly sensitive to Bold launch timing; RBC estimated Q2 guidance becomes $2.5-$2.6B revenues and $0.91-0.94 EPS (vs. prior estimates for $2.6-2.7B and $0.94-0.97 respectively).
According to RBC this development mirrors early stability issues RIM faced with UMTS, EV-DO, EDGE networks, including a Nov 2005 delay with the Blackberry 8700 on AT&T, subsequently resolved by RIM to maintain its hallmark battery life user experience. 3G is significantly more power consumptive than 2.5G (higher processing demands), and the Bold also uses a new Operating System (v4.6) and a new Marvell (NASDAQ:MRVL) 624MHz processor/chipset.
Given street expectations for a late July/early August Bold launch, and with valuation at 36x concentrated FTM P/E, news of the delay may offer near-term valuation volatility. The Firm views any interim price weakness as an opportunity for longer-term investors to accumulate the shares. This delay does not affect their longer-term thesis.
Notablecalls: Expect to see weakness in RIMM today in reaction to RBC's estimate cut. The stock simply can't afford even the slightest miss here. Think we will see RIMM sub-$140 today.
Kudos goes to RBC Capital's Mike Abramsky for continued excellent coverage on RIMM. He's really the Axe in this space.