Earnings Preview: Research In Motion

Research In Motion (RIMM) is expected to report Q2 earnings after market close Thursday, September 25, with a conference call scheduled for 5:00 p.m. ET.

Guidance

The consensus estimate is 87c for EPS and $2.6B for revenue, according to First Call. Management guidance calls for: 84c to 89c in EPS and revenues within the range of $2.55B to $2.65B. Net subscriber account additions in Q2 were guided to approximately 2.6M versus the 2.3M reported in Q1. Analysts average expectations are for new subscribers between 2.55M and 2.65M and around 6.2M to 6.4M in new unit shipments.

RIM's earnings come as the company faces steeper competition now than at any other time in its history. Also, the shares have been held back by a delay in the launch of its new flagship model, the BlackBerry Bold, which was initially said to be launched with AT&T (T) in the U.S. this summer. The Bold has gone on sale in parts of Europe in August. RIM is also widely expected to soon unveil a touch-screen phone without a keypad to compete with Apple's (AAPL) iPhone.

Analyst Views

On the Street: Global Crown Capital is very bullish on RIM, raising estimates just two days ago and now expecting 91c on $2.66B. RBC Capital is a little less sanguine at 88c on $2.6B. Both firms anticipate 2.6M subscriptions and over 6M units shipped. Global Crown expects the ASP is $350, with gross margins at just over 50%. For guidance, Global is expecting what it terms a "blockbuster" back half of RIM's FY09. For Q3, the Street is at 98c, while Global is at $1.07. For Q4, the Street expects $1.10, while Global is at $1.20. Global's estimates reflect its belief that RIM is exceeding the firms prior forecast and that Global's channel checks in the U.S. and Europe confirm its thesis that RIM's products continue to gain momentum despite brutal competition.

Key issues for the conference call: Sales figures and guidance for the Pearl, Bold and Curve devices; ASPs in the $345 to $350 range; commentary on RIM's market share; commentary on the demand environment given the economy and recent issues; and new product updates -- the new Flip, the Storm, the Javelin (a smaller version of the Bold) and the Bold itself which should be in the U.S. market by early October.

Comments

[Evan Grey Owl:]

Global Crown Capital hypes up RIMM earnings hugely just two days before release of facts. They know an earnings "miss" from analysts estimates can devastate shareholders. They did not have their facts remotely straight, and so have contributed to the harm of the aftermath of this "miss". Two questions: What IS their hidden conflict of interest?, and why are such people not sanctioned severely.

2008 Sep 26 12:34 AM