UBS Cuts Numbers on Research In Motion Ltd. (RIMM): M&A Prospects Linger, But Cost Cutting Should Be Main Focus

June 7, 2012 10:47 AM EDT Send to a Friend
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Price: $14.64 +12.36%

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UBS maintains a 'Neutral' on Research In Motion Ltd. (NASDAQ: RIMM) price target of $11.50 (from $15.00).

Analyst, Amitabh Passi, said, "Following RIM’s preannouncement on May 29, we lowered our estimates for RIM now forecasting break-even EPS for FY13 and $1.30 for FY14. We also provided a sum-of-the-parts (SOTP) range for intrinsic value, with the low end at ~$6/sh (cash + WC) and the high end at $16-18/sh, incl an estimate for patents and the subs base. We expect conditions to deteriorate further (though can’t rule out prospect of M&A), and base our new PT on a 50-50 probability of either end of our SOTP range ($6 low-end; $16-18/sh at the high end) being realized."

Passi thinks Microsoft (Nasdaq: MSFT), Amazon (Nasdaq: AMZN), Facebook (Nasdaq: FB), Apple (Nasdaq: AAPL), Google (Nasdaq: GOOG) and some Asian Handset vendors may be interested in acquiring RIMM (as a whole or for specific patents), however, Passi believes the core focus should be on cost cutting which was announced ($1 bln).

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 $10.34 yesterday.


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