Home > Stock Market Buys > B RIMM @ 70.07

B RIMM @ 70.07

They said never to try and catch a falling knife, but I just tried. Outcome TBD.

RIMM dropped 15% post-earnings, after missing revenue by 2% and beating EPS expectations (before one-time items) by .03 (Barrons).

I see the revenue miss, and my interpretation of it is as the product of a few items, chief among which is the iPhone. In this quarter, AAPL released the iPhone 3GS, and of course there was a lot of hype. People shopping for a new smartphone were probably overwhelming drawn to it being a new product, taking them away from RIMM. Not helping the case for the BlackBerry, they had no new compelling products. The tour was released, but it was essentially a Wi-Fi-less Bold warmed over for Verizon, nothing too compelling there.

I see a few catalysts for revenue growth in the future, that will help alleviate the symptoms from this quarter. First, new products, including the Storm 2, which is supposed to have a vastly improved screen over the older, much maligned version. Secondly, the next quarter will start to see the ramp up in Christmas sales, the strongest time for most retailers with RIMM being no exception, yet they are guiding for flat earnings! My read on that is they are trying to be conservative, taking a page out of AAPL’s book. Finally, the push for more presence in the consumer market will undoubtedly hurt their margins slightly. But in the market for smartphones that have a physical keyboard, RIMM is still the only big player. The rumor that came out yesterday that Verizon was no longer interested in carrying the Palm Pre further solidifies RIMM’s position in this sector.

Position Disclosure: Long RIMM at this price. Long AAPL over mid-to-long term, would not recommend a buy at this price. No position in PALM, but my opinion suggests a short.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: