No Christmas in RIMville
Research In Motion is scheduled to report earnings after market close Thursday and the prognosis is not good.
Earlier this month, RIM warned that third-quarter revenue would be lower than the $5.3 billion to $5.6 billion it had previously forecast. Worse, it said it no longer expects to meet its earnings target for the year. The reason? A $485 million writedown for discounting its BlackBerry PlayBook tablet, which isn’t selling well at all, and the continuing decline in demand for its smartphones.
RIM’s third-quarter earnings warning also included a caution about expectations for fourth-quarter phone sales. They might have to be lowered as well.
The company’s share price has been plumbing the lower depths ever since. Not that it hasn’t been doing that for a while now. RIM’s stock hit a fresh 52-week low of $15.48 on Tuesday. That’s down about 77 percent from its 2011 high of $69.86.
RIM’s stock is a falling knife. (And to think it was trading at $147.55 in June of 2008.)
And it’s not likely to hit bottom anytime soon, if RIM’s pre-earnings announcement is any indication. Remember, the company warned that it’s going to sell fewer BlackBerrys in the fourth quarter, which includes the Christmas shopping season. This after the August launch of five new BlackBerry 7 smartphones, one of the biggest global BlackBerry launches in the company’s history.
So expect some grim numbers Thursday. As Morgan Stanley analyst Ehud Gelblum wrote in a Tuesday note to clients, “We believe the situation at RIM continues to deteriorate with the stock supported solely by its book value, and cannot foresee a change without a material change to management tack as, at this point, the migration to [RIM's forthcoming BlackBerry 10 platform] sometime in mid-2012, might already be too late.”