John Paczkowski

Recent Posts by John Paczkowski

A "Broken Brand"? Analysts Aren't Buying RIM's Happy Talk.

We feel fantastic about the future of the company and its prospects.”

Research in Motion co-CEO Jim Balsillie said that Thursday following the company’s steep first-quarter earnings warning. And while he may have convinced himself, he doesn’t have much company.

RIM shares slipped deep into a nasty downward spiral Friday, falling more than 13 percent and dragging the company’s share price below $50 for the first time in six months. And if the barrage of brokerage downgrades issued this morning is any indication, it may be there for a while. To a one, the analyst notes I’ve read this morning reveal a profound loss of faith in the company.

“BlackBerry is a broken brand on its historical high-end user base, RIM is under attack on the Corporate segment, and the company’s profitability premium to peers is at risk,” Bernstein analyst Pierre Ferragu wrote in a note to clients. “We see management expectations for a rebound driven by the launch of the PlayBook and QNX-based phones as unreasonable. We expect little upside from the PlayBook given the fundamentals of the tablet market and by no means consider QNX a game changer.”

Pacific Crest analyst James Faucette told his clients essentially the same thing. “While the company may be anticipating improving PlayBook sell-through in coming months, our latest sell-through checks indicate the opposite,” he wrote. “Additionally, we believe the slate of new products to be released in the second half of 2011 are unlikely to result in better share at the high end. We remain skeptical of the company’s ability to reaccelerate its earnings growth with its current roadmap.”

Even RBC analyst Mike Abramsky, a RIM bull if there ever was one, shook his head in disappointment. “Coming just a month after providing guidance, we believe this further damages already low credibility, making them the ‘poster boy’ for a show me story from here, with little or no credibility given for their $7.50 F12 EPS outlook,” he wrote in a bulletin to clients. “Given how pessimistic investors were already, this will more likely sustain pessimism than alter already polarized views–and may overshadow any pending announcements expected next week at RIM’s analyst day.”

Balsillie’s big refrains during yesterday’s guidance call were “stay tuned” and “just wait.” Looking at the company’s share price today, investors don’t seem willing to do either.

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