An Especially Inauspicious Moment in Time for RIM

Briefing.com reports...
Research In Motion (RIMM), maker of BlackBerry devices, posted solid second quarter revenue growth of 88% and net income growth of 72%. However, the company's results and outlook failed to live up to Wall Street's high expectations.

Shares of RIM were down 20% in Friday premarket trading -- Wall Street tends to punish a stock with a premium valuation relative to peers that fails to live up to expectations.

For the second quarter, total revenue came in at $2.58 billion, compared to the consensus estimate of $2.60 billion. RIM earned $0.86 per diluted share, falling a penny short of estimates.The Waterloo, Ontario-based firm's third quarter outlook is what is causing most of the investor disappointment. The company forecasts revenue of between $2.95 billion and $3.10 billion, which tops the consensus estimate of $2.94 billion. However, earnings are expected to come in between $0.89 and $0.97 per share, which falls below the $0.98 per share consensus estimate. The lower-than-expected earnings forecast is due to the expectations of tighter margins in the third quarter, with the company citing sector specific trends -- Q3 margins are forecast at 47.0%, which is well below the 50.1% average analyst estimate and the 50.7% seen in the second quarter.

Including premarket losses, RIM was down 48% from its 52-week high.
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My take..
And so another former Core Opportunity bites the dust.

Although I believed the stock pointed to $75 when we sold back at ~$125, now that the stock has achieved that price level (and then some), the stock seems likely to decline even lower yet.

RIM finds itself in a heavily-hyped product transition, and has already failed to meet self-imposed deadlines for its new products. Moreover, this is an especially inauspicious moment (difficult consumer markets) to effect the transition, even if their competition (Apple (AAPL), Nokia (NOK), Samsung (SSDIF.PK), et al) were not the formidable foes they are.

Full Disclosure: Sold all shares several months ago, and retain zero investment interest in RIMM.

Comments

[well:]

can anyone believe this honkey ? "seems likely to decline even lower yet" if you retain zero interest don't write negative garbage about it go bash apple ....what a useless article, theres are alot of good upcoming events next month for rim, things will look up again and last thing it needs is garbage like this

2008 Sep 28 04:24 PM

[FishTale:]

Wouldn't we be lucky if many companies sported the healthy growth that RIMM has achieved; in sales, earnings and outlook. In this economy, are you kidding on the negative article. Just goes to show you how insane this market has been. If the whole market doesn't go to zero, RIMM should be looking good. How can any analyst be so blind when their over-expectations, in a market such as we have, are meaningless.

Go Fish!

2008 Sep 28 08:05 PM

[neutrino23:]

I'm a novice regarding RIMM, but I'm skeptical that they can continue to grow. It seems to me that they are a niche player, if a rather large niche. They supported people who absolutely had to have instantaneous communication wherever they were. I wonder how many of those people will be left as Wall Street goes through a wrenching change? On the flip side RIMM is facing considerable competition from several directions in their effort to enter the consumer market. It might turn out OK for them but I don't see it. Even if they can keep market share it will likely be at the cost of lower prices. Either way profits go down.

2008 Sep 29 12:54 AM