Tech Check

More Thoughts on RIMM, Post-Earnings

Good. Just not good enough. Strong. But not strong enough.

Call RIMM's Fourth Quarter earnings report what you want, but just don't call it "good news." At best, there seems to be a disconnect between investors and RIMM's prospects and we're seeing punishment meated out in a particularly harsh way after hours. Longer term investors can afford the 8% haircut right now since RIMM shares have skyrocketed since last summer. But recent attendees to the RIMM party are gonna need to swig the Hair of the Dog tomorrow morning.

Research in Motion reported $930.4 million in revenue when the Street was looking for $935 million. Pacific Crest was closer to $970 million. Oppenheimer was at $950 million. RIMM reported $1.01 but Thomson says the company didn't back out 2 cents in stock-based compensation so the apples to apples comparison number is 99 cents. The consensus was a buck. Miss and Miss. And with a stock trading not just at a 52-week high intraday today, but an ALL-TIME high, you can't just meet, you can't just beat, you gotta beat big. And RIMM couldn't complete the call.

Guidance looks a little better: a revenue range of $1.025 to $1.075 billion. The Street consensus was $995.25 million. The new EPS range is from a $1.01 to $1.09. The consensus had been at $1.04. A quirky "miss and raise" quarter but the "raise" doesn't go nearly high enough to justify the kind of run these shares have been on over the past few months.

We also got word that the ongoing "informal" SEC investigation has gone "formal." Never a good sign, but not wholly surprising either.

Nope, the after-market sell-off is a financial performance story, not an accounting irregularity story. We went through that earlier last quarter when the company restated earnings by $250 million and took the chairmanship away from CEO Jim Balsillie.

RIMM reports a million new subscribers; in line with estimates. Projects 1.125 million to 1.15 million new subscribers during its First Quarter. Again. In line.

But investors were clamoring not for "in-line" anything, but an upside surprise. And it didn't happen. There's a real concern here now that investors have gotten too far out in front of the true growth potential smartphones may offer. It happens all the time. But there's such a euphoria around all things wireless. And RIMM, up until today, was the star. But that star is falling. This doesn't mean that RIMM blew it. It doesn't mean that today's numbers are a failure. Hardly. This company reported a 60% pop in YOY earnings. That ain't no failure. The failure is in the expectations. Which is a shame. Which also means that weakness today could provide a nice little way for investors to in to RIMM at a discount.

If they can stomach the rollercoaster.

Questions?  Comments?