(By Salman - iStockAnalyst Writer)Blackberry maker Research in Motion Ltd. (RIMM) will be reporting its fiscal second-quarter financial results on Thursday.
The shares of the Waterloo, Ontario-based company have been battered in recent days and are down over 33% from its July 19 high, after company came up with a rather conservative second quarter forecast of revenue between $2.55 billion and $2.66 billion and earnings per share between 84 cents and 89 cents with more than 6 million in handset sales and 2.6 million new subscribers. The figure had been quite gloomy compared to the analyst’s earlier estimates of earnings per share of 90 cents. The company attributed the rather dismal guidance to trouble in financial markets and subsequent fall in consumer spending and competitive environment. Apple, with its iPhone is the closest competitor to RIM’s Blackberry. Recently T-Mobile also released the first Google phone G1, though it is not much expected to eat into Blackberry’s market share as it is believed to be lacking in many features.
The company was also supposed to launch its new flagship model, the Bold, in the U.S. during this quarter, but it has been delayed, and no specific launch date has been announced yet. However, the handset was launched in some parts of Europe in August.
However, analysts still remain upbeat about RIM's overall sales. And the arrival of several new models, not just the Bold, later this year positions the company for a strong holiday season, even though competition in the smart phone field is intensifying.
Analyst consensus for RIM’s second quarter is US$2.59-billion in sales, US87$ in earnings per share, 6.17 million in handset sales and 2.62 million new subscribers.
Analysts polled by Thomson Reuters expect earnings of 87 cents a share, excluding one-time items, on revenue of $2.6 billion for the quarter that ended in August.
Raymond James analyst Steven Li is expecting US$2.64-billion in revenue and US88$ in earnings per share. Li maintains a “market perform” rating with a US$140 target price and says “We expect a solid quarter and despite concerns about product delays, we still expect solid guidance for the next quarter".
JP Morgan analyst Paul Coster expects RIM’s results to beat or at least meet expectations. Mr. Coster sees RIM reporting US85¢ in earnings per share on sales of US$2.95-billion. “At the threshold of a new product cycle, we would remain buyers of RIM but the possibility of a conservative third quarter guidance (associated with uncertain product timing) could present investors with a more attractive entry point,” Mr. Coster maintains an “overweight” rating on the company’s shares.
Research Capital’s Nick Agostino is expecting RIM’s results to fall at the mid-point of guidance but mainly in line with consensus, with US$2.6-billion in sales, US88$ in earnings per share, 6.14-million device shipments and 2.61-million subscriber additions. “Our channel checks show continued solid demand for BlackBerries despite economic concerns” says Mr.Agostino. He maintains a “buy” rating with a US$175.
Scotia Capital analyst Gus Papageorgiou expects RIM to report US$2.572-billion in revenue, US85$ in earnings per share, 6.1 million in handset sales and 2.7 million new subscribers. Mr. Papageorgiou believes that RIM’s smartphone market share gains should augur well for the company’s second-quarter results. While maintaining a "sector outperform", Mr. Papageorgiou says “New devices combined with major carrier sponsored campaigns in Europe and North America should set the pace for further market share gains through to 2009”. He gives a price target of $214.
RBC Capital Markets analyst Mike Abramsky expects the company to report it added 2.6 million subscribers and shipped 6.3 million phones.
On Thursday, investors will also be looking for indication whether RIM would soon unveil a touch-screen phone to compete with Apple Inc. Consumers are expecting launch of Bold, Pearl Flip at T-Mobile, and the touchscreen Storm in the November quarter to take on its closest competitor Apple.
In fact, analysts are more optimistic about the third quarter and are expecting a profit of 98 cents a share and a 75% gain in revenue from last year. Mike Abramsky of RBC Capital Markets is expecting revenue of $3 billion to $3.1 billion and earnings of $1 a share to $1.03 a share.
Tero Kuittinen, senior director of research with Global Crown Capital also believes that RIM's guidance for the fiscal third quarter should be strong.
At 9:43 A.M ET, RIM (RIMM) advanced $1.50 (1.55%) to $98.21.
