Break Out the Pepto-Bismol — RIM Reports Earnings Today
With its stock hovering around a five-year low, Research In Motion reports earnings today, and after the company’s late April warning, no one seems to be expecting much of it.
Since slashing its estimates for the first fiscal quarter on April 28, RIM has lost about a third of its market value and seen its stock brutalized by downgrade after downgrade after downgrade. The company charted a course for underperformance and has been heading there with due haste ever since.
Analysts, on average, expect RIM to report earnings of $1.32 a share on revenue of $5.15 billion, according to consensus forecasts from Thomson Reuters. That’s on the lower end of the company’s updated forecast and a fraction of the top-line revenue growth it once reported. As for smartphone shipments, mosts analysts figure they’ll come in around 13.3 million to 13.5 million units for the quarter. Expectations for PlayBook sales vary, but most I’ve seen are in the “less than a half million” range.
These are all important numbers, but the real meat in RIM’s financial results will be found around its full-year guidance and executive comments about some promised product launches.
Few believe RIM can hit its projected earnings per share target of $7.50 for the current fiscal year. If things are as bad as they seem, the company’s going to have to abandon it sooner or later and today would be a wise time to do it. As ThinkEquity’s Mark McKechnie said in a note to clients Wednesday, “a lowering of the bar by RIMM’s management [would be] favorable for the stock as it would remove an ‘overhang’ for value investors.”
Want to know another thing that would be favorable to the stock? A refresh of RIM’s dusty BlackBerry smartphone line. And that will likely also be top of mind during the company’s earnings call today as analysts try to determine if RIM will bring its newest handset — the touch-screen BlackBerry Bold — to market before the end of the summer, complete with the Blackberry 7 OS, as promised. Because if it doesn’t and it misses that summer launch window, RIM’s competitive position will grow weaker still.
Said Susquehanna analyst Jeff Fidacaro in a recent research note, “We believe this could lead to an even worse [second half] not simply due to a push-out, but the timing would also pit RIM against the next-gen iPhone, as well as a slew of new Android devices from Samsung, HTC, and others, some with 4G radios.”