Wheels Coming Off Research In Motion

| About: BlackBerry Ltd. (BB)
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By Angus Robertson

Many analysts have been bearish on Research in Motion (RIMM) for the last few months, but the pace of the company’s decline is stunning.

Analysts had already slashed their price targets in anticipation of poor earnings. Now they are having to revise those pessimistic numbers after RIM’s even-worse-than-expected earnings and forecasts.

Among the most bearish, Deutsche Bank, with a Sell rating, cut its target to $20, less than half its previous target of $45. Jefferies & Co (Underperform) has moved to $24 (from $34), Citigroup (Sell) to $25 (from $45), Goldman Sachs (Sell) is down to $34 (from $40) and JP Morgan (Neutral) to $30 (from $40.50).

“Bottom line, we believe RIM has no short-term fixes to improve product portfolio, brand perception, to reinvigorate share gains, revenue growth and profitability,” Citigroup analysts wrote in a note to clients.

Not Dead Yet

Slightly less negative is long-time RIM-booster Mike Abramsky of RBC Capital Markets, who lowered his target to $35 (from $45) with a Sector Perform rating. “Although it’s possible RIM fails to turn itself around, that outcome may be premature, we believe, given sustained positives.”

Likewise, UBS analyst Phillip Huang lowered his target $41 (from $45). He continues to believe EPS targets for the second half of 2012 are a stretch, but feels much of the bad news has passed for now.

And staying the course is Raymond James analyst Steven Li, who left his $60 price target and Outperform rating unchanged, suggested clients buy RIM shares.

He noted that the company’s transition period is nearing an end as BlackBerry 7 handsets are undergoing certification by 23 carriers around the world and are due to launch late this quarter, while 4G PlayBooks are expected in the fall and QNX handsets should be available early in 2012.

Li also believes the QNX platform will take RIM to the next level, and the company remains very important in the enterprise space and in some consumer pockets.

Geoff Blaber, an analyst at CCS Insight says: “History tells us not to write off RIM. So I have little doubts that RIM will come back with a full and competitive porfolio of products, but I think it’s likely to get worse before it’s going to get better.”

Caris & Co.’s Robert Cihra has it right in saying that RIM “has lost its mojo.” It will be difficult to get it back. To be sure, RIM still does do some things better than its competitors (nice keyboard) and has some appeal to corporate buyers. But the BlackBerry has long lost its status as the must-have status symbol among influencers, to Apple’s iPhone and even to Android-based devices.

Certainly performance can improve and RIM can retain a slice of the market, but it’s just as possible that it will follow Palm down the road to marginalization or worse.

It’s also looking likely that the days of one or both of the co-CEOs are numbered.

Sources: Alacra Pulse, Barrons Tech Trader Daily, Forbes, Financial Post, The Telegraph, MarketWatch, International Business Times, Benzinga, ProActive Investors.