RIM may warn on BlackBerry shipments, analyst says

RIM may warn on BlackBerry shipments, analyst says

Stock Market Predictions

(Global Markets) - Shares of Research In Motion dropped nearly 5 percent on Thursday after an influential analyst said RIM would likely warn that it came up short on BlackBerry shipments this quarter and offer an even bleaker outlook for its flagship smartphone.

The latest version of the smartphone - using the legacy BlackBerry 7 operating system that RIM will replace later this year - has failed to impress demanding U.S. consumers, Jefferies analyst Peter Misek wrote in a note to clients.

Tepid shipments are likely to translate into weaker-than-expected results for the company's fourth quarter ending March 3, he said. That could lead RIM to tip its hand before the formal release of its results on March 29.

Perhaps just as worrying, Misek said, consumer acceptance for RIM's smartphones is starting to erode in Latin America and Europe, where sales of cheaper devices have provided a cushion for the Canadian company as it falls behind the pace in the United States.

"There is a greater than 50 percent chance that RIM will negatively pre-announce the February quarter," said Misek, who is rated five stars by Thomson Global Markets StarMine for the accuracy of his earnings estimates on RIM.

FIVE QUARTERS OF DECLINE IN U.S.

It would not be the first time that the Waterloo, Ontario-based company has decided to come clean before releasing its results. It issued a sharp profit warning ahead of third-quarter results in December, sending its shares into a tailspin. It also revised its forecasts last April before the end of the quarter.

RIM's U.S. sales have fallen for five straight quarters, as consumers embrace Apple's iPhone and high-end devices running Google's Android software. The company has typically offset the decline with rising sales elsewhere.

"We believe Street numbers will likely be revised down given the lack of major new products in the near term and continued sales challenges due to competitive pressure from both low-end and high-end devices," said Misek, who rates the stock "underperform".

RIM's shares have slumped 80 percent from a peak in February last year as it misjudged the shifting landscape and botched the launch of the PlayBook, a poor-selling alternative to Apple's iPad tablet.

It has delayed the planned launch of new BlackBerry smartphones running on the same QNX system as the PlayBook until late 2012. Analysts view the launch of what RIM has dubbed the BlackBerry 10 as a "make or break" event.

Misek said RIM likely shipped fewer than 11 million legacy phones in the December-February quarter, a sharp drop from the previous three months as well as from the year-earlier Christmas season, traditionally the strongest period of the year for smartphone sales.

In December, RIM said it expected to ship between 11 million and 12 million handsets in the Christmas quarter ending March 3.

APPLE'S IPHONE 5 ON THE HORIZON

He lowered his quarterly earnings estimates to 69 cents a share on revenue of $4.2 billion, down from his earlier expectation of 82 cents a share on revenue of $4.6 billion.

At least for now, the average analyst forecast is for 83 cents a share on revenue of $4.58 billion, according to Thomson Global Markets I/B/E/S. RIM is aiming for between 80 and 95 cents a share and revenue of between $4.6 billion and $4.9 billion.

Misek is not alone in seeing lackluster BlackBerry shipments. Morgan Stanley analyst Ehud Gelblum dropped his estimate to 9.6 million from 11.5 million earlier this month.

Adding to RIM's woes, Apple is expected to launch an iPhone 5 before RIM puts out a QNX-based BlackBerry 10 device. Misek, who expects the new RIM device in September, said the debut of the new iPhone was particularly troubling for RIM, and he cut his price target on RIM's U.S.-listed shares to $12 from $15.

The shares slipped 4.6 percent to $13.51 by mid-morning on the Nasdaq. RIM's Toronto-listed shares are down 5 percent at C$13.33.

(Additional reporting by Sruthi Ramakrishnan in Bangalore; Editing by Frank McGurty)

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Storm clouds gather for RIM after profit warning

Storm clouds gather for RIM after profit warning

Stock Market Predictions

TORONTO (Global Markets) - Storm clouds over Research In Motion have darkened with a dismal profit warning, and the company's shares fell sharply on Friday after the company's third jolt of bad news in a month.

The BlackBerry maker, out of favor even with its fans, will need flawless execution on a promised next generation of gadgets to convince increasingly skeptical investors that it can run with mobile leaders Apple and Google.

Ontario-based RIM on Thursday slashed its sales and earnings forecasts, an unexpected blow that followed an anemic forecast in late March and last week's troubled launch of an as-yet underwhelming competitor to the red-hot Apple iPad.

"The updated guidance has substantiated a lingering concern about a growing portfolio gap in a hyper-competitive market," CCS Insight analyst Geoff Blaber said.

RIM tried to excite customers last year with an improved browser and upgraded operating system on its touchscreen and slideout keyboard BlackBerry Torch. But the response was tepid.

It promises another major upgrade and a slew of more powerful touchscreen devices at its annual BlackBerry World trade show in Florida next week.

RIM's products compete with those from Apple and with devices using Google's Android platform. Customers, are tired of waiting for RIM's innovations to kick in, are voting with their dollars for the rival phones.

RIM shares fell some 14 percent by early afternoon on Friday, in line with a late-trade fall on Thursday -- an eerily similar drop to that after its March results. The shares are around $49, their lowest level since October.

"We've heard for too long about RIM's great product roadmap. Consumers are not listening nor waiting," National Bank analysts said in a note. "RIM does not even seem to have dual cameras on its upcoming BlackBerry product line-up. The last time we checked, video is the future."

Thursday's after-market warning focused on weak sales of RIM's aging smartphones in the United States and Latin America, and the company lowered an already tepid outlook for the current quarter.

All hope seems to rest on what the Canadian company pulls out of its labs and onto center stage at BlackBerry World, starting Monday, where the company will unveil a new generation of touchscreen BlackBerrys.

LOSS OF FAITH

RIM had hoped to turn its fortunes around with the launch of its long-awaited PlayBook tablet -- a sleek tablet computer that runs on a fresh QNX platform that RIM says will transform its business.

But the PlayBook won dismal reviews and complaints it was rushed out before it was ready, despite a six-month launch pad.

"Mis-execution has undermined sentiment recovery," wrote Mike Abramsky, a longtime optimist on RIM. Abramsky kicked RIM out of his list of preferred stocks and slashed his target price to $55 from $90.

"PlayBook is a promising tablet contender, but RIM bears some responsibility for its less-than-favorable debut, confusion over its positioning and criticisms it was not fully ready for market," he wrote.

Customers and developers are eager to know when the PlayBook will run Android and BlackBerry smartphone applications, while investors want to know how many PlayBooks sold in the first week and when better phones will ship.

Jefferies analyst Peter Misek said RIM was scrambling to fix glitches in the PlayBook and integrate QNX, likely leading to delays for new handsets and flagging interest from carriers. He dropped his rating by two notches to "underperform" and cut his price target to $35 from $80.

RIM has tried to shift attention to what comes next -- a suite of phones running an upgraded (but not yet QNX-based) operating system with beefed-up hardware.

"We're cutting over to a whole new platform, a whole new set of products, a whole new set of architecture. And it's very, very powerful and very, very exciting," RIM's co-chief executive Jim Balsillie told a conference call on Thursday.

"Stay tuned, the products are truly fantastic both in terms of their style and their performance. The issue is, I would have liked to have them sooner."

The sliding stock price shows that the market is yet to be convinced.

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