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CNBC.com RIM Earnings |
], Research in Motion pre-announced its earnings and came in well below Street expectations. We'll get more color and far more information when the company releases its official announcement Thursday after the bell. We already know that RIM's [RIMM
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] earnings per share will come in around 81 cents to 83 cents on revenue of between $2.75 and $2.78 billion. The other key metrics: 2.6 million new subscriptions and 6.8 million BlackBerrys sold, both categories well below analysts' original expectations.
That's what we know. What we don't know is how RIM will guide the Street. The company has a history of being conservative, like Apple, so the question now is just how moderate the company will be. RBC Dominion's Mike Abramsky is expecting the company to guide to 2.6 million to 2.8 million new subs and 7.1 million to 7.4 million units shipped with an average selling price of $328. The Street is looking for 87 cents for the company's fourth fiscal quarter earnings per share on $3 billion in revenue. RBC is looking for a little less, probably around 80 cents to 83 cents a share on $2.9 billion to $3 billion in revenue.
RIM has been hurt recently by some unusual execution failures. Both the Bold and the Storm were delayed, the Storm suffered less-than-stellar reviews which certainly isn't helping carrier Verizon,[VZ
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] there were some software glitches. All those issues in the face of a crumbling economy. When RIM needed to execute flawlessly, it simply couldn't. And investors are paying for it, watching shares plunge from over $100 back in September to $40 and change today. Ouch.
RIM has also suffered a kind of identify crisis these last several quarters. Is it an enterprise company? A consumer electronics company? Both sides of the business have been suffering from the economic meltdown, but the question for investors is whether the Storm and the Bold can successfully bridge the gap between both sectors and offer a legitimate challenge to the Apple iPhone. I'm not clear that's happening. In the past, RIM has been able to rely on a regular, enterprise upgrade cycle to keep growth going. With business customers no longer spending -- and so many Wall Street Crackberrys now out of work, it's clear that RIM is feeling the pain. And hard.
That's why I have routinely gone back to Apple [AAPL
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] as a better investment alternative. Rather than relying on just handsets, Apple's got Macs and iPods in addition to iPhone. Maybe all three get stung in varying degrees during an economic slowdown, but I'd take multiple revenue streams over a one-trick pony any day.
Meantime, longer term, you can't argue with the RIM model. The company consistently comes up with gotta-have handsets that its rabid customer base scramble to own. That scramble has gotten a little soft lately, and Apple is gaining ground, but the smart phone sector can easily handle two, even three or four, major players. RIM's strategy to bridge the gap between business users and consumers is lessening the blow today, and will serve this company well in the not-to-distant future.
Next year, handsets will see a net decline in sales volume of about 10 percent, but smart phone makers, like RIM, and Apple, and Nokia [NOK
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] and HTC and so many others, could see business grow as users upgrade legacy phones to something a lot better. Short term, like everyone else, RIM will suffer. Longer term? Count these guys out at your own risk.
Questions? Comments?
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