RIM Misses But Will Cooler Heads Prevail On Stock?
After the build-up and the hype, and the enormous amount of optimism surrounding Research in Motion shares, the company can't beat the buzzer and stock gets popped.
RIM shares got pummeled when the company's fourth quarter earnings came out, missing earnings per share estimates by a penny, reporting 84 cents instead of the 85 cent consensus.
Revenue also came up short, at $2.24 billion against the $2.3 billion expectation.
New subscriptions and BlackBerry units shipped were essentially in line with expectations. But the problem for this company comes from its guidance into its fiscal first quarter. The Street was looking for 90 cents on $2.439 billion. Instead, RIM expects 84 cents to 89 cents on higher than expected revenue. That's leading to questions as to why RIM won't be able to translate those better than expected revenues into increased profits? What new expenses are we not aware of, or that Wall Street wasn't counting on? Further, for a company so used to knocking the cover off the ball, why such a lukewarm report (in comparison to the expectations among the experts?)
A quick call of some analysts suggest to me that some are worried that RIM's historic hyper growth might be waning, if ever so slightly. That's a problem. Another analyst wonders whether the Apple iPhone is taking a bigger toll on RIM than people had anticipated, slowing the company's growth faster than expected. In other words, are RIM's problems its own? Are they a suggestion that the smart phone market isn't growing as fast we had assumed? Or is Apple gaining more momentum than we thought?
All good questions, and all topics that will get an enormous amount of attention over the next several hours. Meantime, for the investors taking money off the table, who have reaped the benefits of that 70 percent jump since March, that's probably a prudent move.
But for those of you new to RIM, wondering whether now is the time to realize some losses and take your money out, consider that RIM's product pipeline has never before been this robust, and many analysts call the back half of this year an "inflection point" for growth, with several new consumer and enterprise BlackBerrys on the way.
This was a miss, but only slightly. Fundamentals are strong, outlook is good. We'll see whether cooler heads prevail after investors get a chance to digest the numbers.
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