Wednesday, August 3, 2011

Rimm


The Street is digesting Research in Motion’s (RIMM) announcement this morningthat long-awaited BlackBerry devices based on its updated operating system will hit stores later this month.
Jeff Kvaal, Barclays Capital: Reiterates an Overweight rating and a $52 price target. “Overall, we view this announcement as better than expected with the initial launch earlier than thought. These devices provide a needed refresh to RIM’s product portfolio ahead of the anticipated launch of QNX based smartphones in early 2012. Overall, we believe this announcement should calm investor concerns of another mis-execution on the launch, providing incremental visibility into the company’s full year FY12 guidance range of $5.25-$6.00. On track execution towards the mid point of RIM’s full year FY12 EPS guidance leaves RIM currently trading at low 4x levels.
Jennifer Fritzsche, Wells Fargo: Reiterates a Market Perform rating. “We view this as a slight positive for RIMM. As we have written before, shipment volumes are not the problem with RIMM (our FY12 shipment estimate is 51MM units – basically flat with FY11). Rather, we believe the company will continue to see greater ASP pressure as the competition in the smartphone arena continues to build. While today’s announcement should help keep RIMM ”in the game” – we believe key part of a RIMM turnaround will be built around the company’s next generation of handsets (QNX).”
Michael Genovese, MKM Partners: Reiterates a Neutral rating. “We expect sell‐in of the products during August to boost revenues for 2QFY12 (August 2011). While new products typically pressure GMs a bit, these products look similar enough to older models that it should not be a major problem. We don’t think new Bolds and Torches with incrementally enhanced browsers will turn the ship around at RIMM. The company needs to make a big splash with the QNX OS and new form factors next year. While 2QFY12 numbers could be strong based on sell‐in, there is the risk that sell‐through numbers in 3QFY12 (November) will disappoint.”
Robert Cihra, Caris & Co: Reiterates an “Average” rating on the shares and a $40 price target. “We do continue to see meaningful setup for a rebound in BB units from <12mm in RIMM’s Aug-qtr to >15mm in its Nov-qtr, driven by carriers restocking after a dearth of new product and our belief enough customer appetite still exists for “anything” resembling a refresh of RIMM’s unique niche products. This said, with BB 7 still only evolutionary before more critical NEXT generation dual-core “super-phones” targeted to start launching early CY12 (migrating to new multitasking QNX OS as its long-overdue rewrite of the core BlackBerry OS), we wouldn’t expect more than a couple quarters of upgrade before new phone execution matter again….keeping risk high.”
RIM shares are up 85 cents, or 4%, at $25, bucking a weak market.

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