Four Potential Negatives for Research in Motion (RIMM) - Jefferies
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Price: $14.64 +12.36%
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Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
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Analysts at Jefferies said it can get worse before it gets better for Research In Motion Ltd. (NASDAQ: RIMM). The firm sees a number of negative events over the next year, keeping pressure on the stock. The firm reiterated their Underperform rating and downside $35 price target.
Analyst Peter Misek sees four potential negatives over the next 6-12 months for RIM:
1) product delays: "we believe the majority of OS 7 devices have been delayed from Aug to Oct as integration, polishing, and carrier certification are taking longer than expected (e.g., in a recent interview FT's CEO noted regular bugs with RIM devices and quality problems with RIM's next-gen devices). We believe this is causing delays in other product launches, notably the 3G/4G Playbook and QNX based handsets, which are now more likely in the H2:CY12 vs. guidance of early CY12."
2) earnings guidance reset: "we believe mgmt will either have to accept lower margins or lower unit sales as carriers become worried about inventory levels for an aging portfolio of products.
3) aging product portfolio (implications of Marvell's results): "last night Marvell reported FQ1 (Apr) revs of $802M vs. Street $826M due to Mobile & Wireless revs -30% Q/Q vs. -20% guidance. Mgmt cited “continued softness at one of our largest customers" as the cause. We believe RIM is 80% of Marvell's wireless revs and was the reason for the weakness. Mobile & Wireless FQ2 (Jul) revs guided +20% Q/Q mainly due to TD-SCDMA doubling and WiFi strength. All of mgmt's RIM comments were focused on a hopeful ramp in H2:CY11 and not on FQ2."
4) waning carrier support: "based on our checks, RIM is being forced to increase handset bounties and co-marketing payments in order to retain carriers and slots. We believe carriers want to support three main ecosystems: iOS, Android, and one TBD. Unfortunately for RIM, Windows is now being considered, but Windows 8 may be a H2:CY12 or even 2013 event."
For more ratings news on Research In Motion Ltd. click here and for the rating history of Research In Motion Ltd. click here.
Shares of Research In Motion Ltd. closed at $43.57 yesterday.
Analyst Peter Misek sees four potential negatives over the next 6-12 months for RIM:
1) product delays: "we believe the majority of OS 7 devices have been delayed from Aug to Oct as integration, polishing, and carrier certification are taking longer than expected (e.g., in a recent interview FT's CEO noted regular bugs with RIM devices and quality problems with RIM's next-gen devices). We believe this is causing delays in other product launches, notably the 3G/4G Playbook and QNX based handsets, which are now more likely in the H2:CY12 vs. guidance of early CY12."
2) earnings guidance reset: "we believe mgmt will either have to accept lower margins or lower unit sales as carriers become worried about inventory levels for an aging portfolio of products.
3) aging product portfolio (implications of Marvell's results): "last night Marvell reported FQ1 (Apr) revs of $802M vs. Street $826M due to Mobile & Wireless revs -30% Q/Q vs. -20% guidance. Mgmt cited “continued softness at one of our largest customers" as the cause. We believe RIM is 80% of Marvell's wireless revs and was the reason for the weakness. Mobile & Wireless FQ2 (Jul) revs guided +20% Q/Q mainly due to TD-SCDMA doubling and WiFi strength. All of mgmt's RIM comments were focused on a hopeful ramp in H2:CY11 and not on FQ2."
4) waning carrier support: "based on our checks, RIM is being forced to increase handset bounties and co-marketing payments in order to retain carriers and slots. We believe carriers want to support three main ecosystems: iOS, Android, and one TBD. Unfortunately for RIM, Windows is now being considered, but Windows 8 may be a H2:CY12 or even 2013 event."
For more ratings news on Research In Motion Ltd. click here and for the rating history of Research In Motion Ltd. click here.
Shares of Research In Motion Ltd. closed at $43.57 yesterday.
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