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Steve Cortes: If You’re Long RIM, Hold Don't Sell

Shares of Research in Motion slipped over 10% in extended trade with investors running for the exits after the company’s latest earnings report.

None of the Fast traders suggested holding your nose and buying, even with the stock near a 5-year low.

However trader Steve Cortes says if you’re already long – “historically it has paid that when a market gaps badly against you not concede immediately on that gap.

Instead, take a bit of additional risk. Wherever it opens I will stop out a percentage or two lower.” But he intends to hold at least for a short while and not panic out of the stock. "Genereally it pays to not immediately surrender."

Trader Guy Adami doesn’t agree with Cortes' strategy. He says, if you’re long get out of at least a portion of your position.

Largely, the selling was triggered after the company slashed its outlook; it now sees earnings in the current, fiscal second quarter coming in at between 75 cents a share and $1.05 a share.

That’s well short of analysts' expectations of $1.40 a share, according to an estimate from Thomson Reuters.

Also RIM forecast sales of between $4.2 billion and $4.8 billion, short of the expected $5.461 billion.

”I want to know what happened to the business between April and now that they had to revise their forecast,” says Fast trader Karen Finerman. “It feels like the company is in somewhat of a freefall. It may seem cheap, but there’s no need to get in here.”

“The numbers say to me that they can’t earn yet they’re in one of the biggest growth markets there is,” adds Tim Seymour.

Jim Balsillie, RIM Co-CEO, said in a statement that the company's business remains "solid overall," with rising market share in "markets around the world and a strong balance sheet with almost $3 billion in cash."

"We believe that with the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012," Balsillie said.

Colin Gillis BGC isn't buying it. He calls RIM a house on fire. “Of course it’s cheap. Until we see some positive signs there is no reason to get involved with this name."

By the numbers, RIM reported earnings of $695 million, or $1.33 a share, down from $1.38 a share a year earlier. Sales for the most recent period rose to $4.9 billion, against $4.235 billion a year earlier.

Analysts who follow RIM expected the company to turn in a profit of $1.32 a share on sales of $5.15 billion in the most recent quarter, according to Thomson Reuters.

”This is beyond disappointing,” says Fast trader Guy Adami. “The quarter was lousy but the guidance was worse.”






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Trader disclosure: On June 16, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (NUE); Adami Owns (MSFT); Adami Owns (BTU); Finerman Own (AAPL); Finerman Owns (BAC); Cortes owns (GOOG); Cortes owns (SVU); Cortes owns (MS); Cortes owns (GS)
Cortes owns (RIMM); Cortes is short the Nikkei; Cortes is short the Euro; Cortes is short the Australian Dollar; Cortes is short Silver; Cortes is short (BIDU); Cortes is short Corn
Cortes is short Natural Gas

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