Ticonderoga on IT Hardware & Networking: RIMM on Tap This Thursday with Implications for Apple and the Supply Chain

Ticonderoga on IT Hardware & Networking: RIMM on Tap This Thursday with Implications for Apple and the Supply Chain

Ticonderoga analyst says, " RIMM Set to Report on Thursday Evening. Research In Motion (Nasdaq: RIMM)(Not-Rated) is scheduled to report 1QFY12 results after the market close on Thursday. This report will provide investors with a glimpse into the depth of RIMM's challenges given the near-term gap in the company's smartphone portfolio, while also updating investors on the company's new tablet initiative. This report is also likely to have derivative implications for the leading North American EMS providers that manufacture Blackberry devices."

"The Downfall of RIMM and NOK Open Up Opportunities for Apple. In our view, the downfall of both RIMM and Nokia (NYSE: NOK)(NotRated) are providing Apple (Nasdaq: AAPL)(Buy-rated) with further opportunities for the iPhone to gain market share. The ramp of the mobile Internet has driven increased innovation in the smartphone market but the leaders of the past are the companies with the greatest challenges today. During our recent trip to Taipei, we highlighted strength in the smartphone market at large, however, there was a wide divergence in trends at the various smartphone OEMs. With Apple holding just 5% unit market share in the mobile phone market during 1Q11 based on estimates by IDC, we believe the company still remains in the early stages of the iPhone ramp around the world."

"Playbook Trends to Provide More Color on iPad Competitors. This will be RIMM's first quarter of Playbook sales, providing investors with an update on how iPad competitors are faring in the tablet market. During the first fourteen months after the iPad launch, Apple sold over 25 million iPad units and we believe competitors will have a difficult time catching up with the company's momentum. Over the past year, we have attended numerous conferences around the world and we have yet to run into a tablet that comes close to the iPad experience. Although we expect RIMM to remain optimistic surrounding it's new tablet initiative, we doubt the Playbook will make a dent in the tablet market in the near term. Also, Hewlett-Packard (NYSE: HPQ)(Neutral) will launch the TouchPad on July 1."

"RIMM May Reset BlackBerry Expectations, Tech Supply Chain at Risk. With a near-term product gap in the BlackBerry portfolio, we believe RIMM is susceptible to weakening demand trends and may need to reset unit expectations for BlackBerry devices for 2QFY12. Despite already low expectations, we believe this could ripple through the RIMM supply chain. Within our coverage universe, Celestica (NYSE: CLS)(Buy) has the highest exposure to RIMM at 21% of 1Q11 sales but has been gaining incremental programs, while Flextronics (Nasdaq: FLEX)(Sell) generated over 10% of its March quarter revenue from RIMM. Outside of our EMS coverage universe, Jabil (NYSE: JBL)(NotRated) generated 15% of FY10 sales from RIMM and we believe M-FLEX (Nasdaq: MFLX)(NotRated) generated 30-45% of sales from RIMM in the past."

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