Stock Of The Week: Key Takeaways From The Scary Research In Motion (RIMM) Earnings Report

Mar. 30, 2012 11:28 AM ETBB, MSFT, NOK, AMZN, HPQ, DELL-OLD, AAPL
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Contributor Since 2012

I am an investment professional currently working for the amazing Wall Street Bad Boys.

Troubled BlackBerry maker Research In Motion (RIMM) had reported earnings after the market close yesterday and they were not as bad as some analysts had expected. Then again, they were far from great. To quickly summarize:

  • 4Q2011 revenues were down 25% to $4.19 billion over the $5.56 billion reported for the same quarter last year. RIMM also reported a net loss of $125 million verses net income of $934 million for the same period last year.
  • Several more key executives including the former co-CEO/co-founder, chief technology officer (CTO) and chief operating officer (COO) have jumped ship to pursue other interests.
  • Devices for the BlackBerry 7 platform, launched less than six months ago, are "not selling as well as anticipated." Hence, Research In Motion (RIMM) was forced to take a write-down charge of $267 million for the quarter.
  • RIMM also ceased giving guidance.

However and if that summary does not scare you, consider the following: A comprehensive SeekingAlpha article has noted that Research In Motion (RIMM) had shipped about 500,000 Playbook tablets for the entire quarter while Apple (AAPL) is shipping twice that many iPads per week. The article further pointed out that Apple (AAPL) is easily selling two or three times as many iPhones as RIMM is selling BlackBerries. In fact, there are reports that Apple (AAPL) is even selling more iPhones in Canada than Research in Motion (RIMM) is selling BlackBerries - a downright scary report if it's true.

Nevertheless, it's also worth mentioning that a writer for Forbes has pointed out that the most encouraging thing from Research In Motion's (RIMM) earnings call was that the company's current management team seems to at least have an understanding of just how deep the problems are at the company as that was not the case with the previous management team.

Meanwhile, the Wall Street Journal's Deal Journal blog has a post with a lengthy list of "potential" buyers of Research In Motion (RIMM) that included:

Obviously to say that some or maybe even most (or maybe even ALL) of them would have any interest in buying the troubled BlackBerry maker would be ridiculous and the Canadian government could just as easily block any deal with a foreign company (as it has been known to do in other cases) but certainly an acquisition of all or even part of the company to stop the bleeding would be welcomed by any shareholders who have not already sold their shares. After all and as of the Thursday market close, Research In Motion (RIMM) was down 5.3% since the start of the year, down 75.9% over the past year and down 70% over the past five years but its up as much as 3% in early morning trading.

Nevertheless, perhaps the lesson best learned from all the problems at Research In Motion (RIMM) is just how quickly things can change for a technology leader - something Eastman Kodak Company (EKDKQ) investors have learned the hard way and something that Apple (AAPL) investors could easily learn in the future.

In the mean time, those who want to consider trading or placing a bet on Research In Motion (RIMM) in the short-term (while its still around) should add the stock to their my portfolio page in order to keep an eye on our directional change predictions and probabilities for the stock.


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