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Silicon Valley Bureau Chief
This is a big day for Research in Motion as it prepares to release its first quarter earnings, and with Apple's iPhone 3GS debuting tomorrow, a big week for the wireless sector.
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CNBC.com RIM Earnings |
For RIM, it's been a strange couple of weeks. Last week, there was near euphoria with several analysts raising estimates ahead of today's release, even as RIM shares have nearly doubled since those March 9 lows.
But yesterday, as earnings loomed, RIM shares began to retreat as investors got more squeamish about what this company would report today.
I would make the argument that RIM's earnings today, and even its guidance for the next quarter or two, are not nearly as important as the market trends upon which this company is seizing, and the success it continues to enjoy among both enterprise customers and consumers.
With smart phones still only representing about 12 percent of the nearly 1 billion handsets expected to sell this year, the opportunity for growth among the major players, including Apple, Nokia, Palm, Samsung, Google, Microsoft remains robust. Across the board.
Still, many on the Street are looking for a sizeable beat to expectations tonight. The Street's consensus is 93 cents a share on $3.4 billion in revenue. New subscriptions should reach 4.2 million, and the company likely shipped 8.3 million units during the quarter. Guidance should show some noticeable improvement with the Street anticipating 96 cents a share on $3.6 billion in revenue; 4.2 million new subs and 8.5 million to 9 million new handsets sold.
RBC Capital's Mike Abramsky says BlackBerry sales have benefited greatly from ongoing promotions by carrier partner Verizon, and other partners like Sprint, AT&T and T-Mobile are all seeing ongoing momentum with the product. And that comes even with all the chatter surrounding Apple's iPhone, Palm's Pre and new Android handsets from Google and T-Mobile.
Just as an aside, RBC anticipates Apple will sell 500,000 to 700,000 iPhone 3GS handsets this weekend. And, as reported, Piper thinks the number could hit 750,000 units this weekend. And yet RIM still keeps churning the revenue. Apple's price cut to $99 was seen as a shot against Palm and RIM, but that's not to say we won't see ongoing price cuts by RIM as well to keep things competitive.
The reason the RIM story is bigger than merely today's earnings news, and even its second quarter guidance, is the stuffed product pipeline this company is sitting on right now. More Blackberry devices are scheduled for release before year end than at any other time in the company's history. And with a flood of innovation and new handsets on the way, RIM's outlook through the rest of the year seems strong, to say the least.
(Innovation is a funny word, especially when the company generated headlines earlier this week with its new "Tour," which seems an awful lot like the "Bold," but managed to generate excitement anyway. The product to watch for is the new hybrid BlackBerry which, as I have reported before, will feature both a touchpad and touch screen and could be a real problem for the Palm Pre.)
On that front, RBC reports new Changewave data this morning showing 44 percent of respondents are interested in buying an iPhone in the next 90 days, versus the 30 percent in March. But more importantly for the sector, a record 14.4 percent of those surveyed say they're planning to buy a smart phone in the next 90 days, and that's good news for anybody playing in the sector.
RBC in fact expects the company to report $1 a share in earnings today on $3.6 billion in revenue. The firm's outlook also is more bullish than consensus by $100 million, expecting 95 cents to $1 a share for the company's second quarter on $3.6 billion to $3.8 billion in revenue.
It would seem that BlackBerry still has a ways to run in the marketplace, and RIM still has a ways to run on Wall Street. The top names still generating the biggest growth, and despite a big run in RIM shares, there's still seems like there's plenty of room left for air in this balloon.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes