'Controlled Launch' May Limit Initial BB10 Sales (RIMM)

December 4, 2012 10:59 AM EST
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Research In Motion Ltd. (NASDAQ: RIMM) has seen a flurry of upgrades ahead of its critical BB10 launch next year, but some on Wall Street think analysts are getting ahead of themselves. MKM's Communications Equipment analyst Michael Genovese is among those with a more cautious view.

"The basis of these upgrades has been, given relatively low BB7 and below channel inventory, that BB10 will drive significant unit growth from channel fill and ASP increases from mix shift," said Genovese.

He differs from many bulls because he expects a "controlled launch" with low initial channel fill.

"According to our due diligence, we believe RIMM's channel partners are cautious about holding too much initial BB10 inventory because of how much share it has lost in developed and developing consumer and enterprise markets," continued the analyst.

"We also think it is in RIMM's interest to conduct a controlled launch of BB10, both to create the impression of scarcity/success and to avoid heavy discounting and revenue reversals if and when the new products experience disappointing sell-through."

MKM Partners has a Neutral rating on Research In Motion Ltd. (NASDAQ: RIMM) with a revised price target of $11.00 (from $9.00).

For an analyst ratings summary and ratings history on Research In Motion Ltd. click here. For more ratings news on Research In Motion Ltd. click here.

Shares of Research In Motion Ltd. closed at $11.60 yesterday.

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