Preview: Research In Motion Seen Doubling Profits

RESEARCH IN MOTION (RIMM)

Makes THE device business people use to communicate when they're not in front of a computer.

Beloved product + Lack of competition + Heady subscription fees = $66 BILLION market cap.

Reports Q4 earnings Wednesday 4/2 at about 405p ET - 415p ET. Conference call at 5p ET.

rim_logo_new.jpg
CNBC.com

WHAT WILL MOVE THE STOCK:

SUBSCRIPTION, DEVICE GROWTH - Two key figures for Research in Motion are the number new subscribers added and the number of devices sold. Last quarter, RIMM gained 1.65 million net new subscribers for a total of "approximately" 12 million subscriptions. CNBC's Silicon Valley Bureau Chief Jim Goldman says most analysts have posted estimates of around 2 million net new subscribers added and about 5 million devices sold. However, he's also hearing "whisper" estimates north of 2.1 million new subs.

NOW THIS IS A GROWTH STOCK - You don't often see numbers like these from a company as big RIMM: Q4 earnings are expected to shoot up 113% and revenues are forecast to double. Over the next year, analysts expect profits and revenues to jump "only" 55%. Do RIM's subscription figures and revenue opportunities support these fantastic growth expectations?

GUIDANCE - Analysts think RIM's guidance for Q4 is a touch conservative. On February 21st, RIM said EPS would be in the $0.66 to $0.70 range. Current consensus is $0.70. Recently, analysts at several firms raised estimates based on their bullish read of March sales and inventory levels. The company also said quarterly revenues would be between $1.8 billion and $1.87 billion. The consensus estimate is near the top of that range at $1.858 billion. Are investors pricing in good numbers? Probably. Perhaps more important: What will RIM say about next quarter?

NEW STUFF - On Tuesday, RIM showed off a new Blackberry at the CTIA Wireless show in Las Vegas that adds Wi-Fi support. Check out Jim Goldman's blog (below) for more on CTIA and his take on RIM. The company is also rolling out the Blackberry EV DO Curve this month. The analyst at RBC thinks it will sell well. However, is it enough to deal with...

COMPETITION AND THAT IPHONE THING - Apple's iPhone isn't serious competition... yet. A lack of security features kept corporate IT departments from endorsing the original iPhone, but Apple and others are working on fixing that. Is RIM doing enough to keep its business customers from lusting for (and buying) iPhones or other smart phones?

ESTIMATES:

Q4 Estimates: EPS up 113% to $0.70, revenues up 100% to $1.858 billion

Q1 Estimates: EPS up 94% to $0.76, revenues up 86% to $2.017 billion

FY 09 Estimates: EPS up 55% to $3.49, revenues up 55% to $9.256 billion

Source: Thomson Financial

Year-ago actuals: Q4 EPS $0.33, Rev. $930 million

FACTOIDS:

CRAMER LIKES IT - On March 24th, Mad Money host Jim Cramer said he expects RIM will report good Q4 earnings numbers. Since then, RIM shares are up about 5%.

UNCHANGED IN A WILD MARKET - While the overall stock market has fallen in recent months, Research in Motion shares have held their ground. The stock is virtually unchanged since the company last reported earnings. The day after its last earnings release (December 21st), RIM closed at $118.63. Over the same period, the Dow Industrials have fallen 6%, the Nasdaq Composite dropped 12% and the S&P 500 lost 8%.

NO REALLY, UNCHANGED IS GOOD - If unchanged still doesn't sound impressive, look at what's happened to other tech giants since December 21st: Apple is down 23%, Microsoft has fallen 18% and oh yeah, Google is down 33% . Still, RIM's revenues and earnings are expected to double year-ago results, but the stock hasn't gone anywhere since December. What's wrong with this picture?