Q3 Preview: RIM (RIMM) Pre-Announced, How Much Worse Can It Get? Well...

Whenever I write about Research In Motion (Nasdaq: RIMM), I always think about that great Shania Twain hit "From this Moment On," alluding to a perpetual fresh start for the Waterloo, ON-based maker of BlackBerries and PlayBooks.

But investors might be singing "That Don't Impress Me Much" following it's earnings report after the market closes Thursday, while RIM could be humming The Righteous Brothers "You've Lost that Lovin' Feelin'."

Earnings for RIM are expected to be $1.19 per share on revenue of $5.27 billion. RIM reported earnings of $1.74 per share in the same period last year.

Shares have gotten thwomped in the quarter, losing 45 percent to $17.86 at the end of November. The stock is down 16.4 percent since, and off 74.3 percent for the year. Shares of RIM have traded within a range of $14.80 to $70.54 over the last 52-week time frame.

Data from Bloomberg has eight analysts at Buy, 30 with a Hold, and 15 at Sell on RIM. The price target average is $20, with a low of $10 and high of $40.

On December 2nd, RIM pre-announced shipping approximately 150,000 PlayBook tablets, far below expectations. The company expects to take a pre-tax charge of $485 million, or $360 million after tax.

Analyst Comments

• Goldman Sachs sees earnings of $1.22 with revenue of $5.221 billion. Goldman expects focus to be on RIM's services and ARPU trends, as well as OpEx plans.
  
  Goldman said, "our estimates are currently assuming that RIM takes action to further reduce its headcount and opex runrate as it manages its platform transition, given that we estimate near 5 percent operating margins in its Hardware segment." Acceleration of ARPU declines in the services business are also expected, with carriers negotiating lower contracts moving forward.
  
  
• JPMorgan sees EPS of $1.23 and revs of $5.269 billion.
  
  JPMorgan is cautious into earnings despite the pre-announcement. The firm believes impacts on opex would be positive -- unless it affects R&D. JPMorgan sees an issue with the dual CEO structure, and whether it's the best form of governance at RIM.
  
  
• Wells Fargo is modeling is modeling EPS of $1.16 and revs of $5.38 billion. The firm said 'Gross margin is expected to be inline at 37.0 percent."
  
  
• BGC sees EPS of $1.23 and revenue of $5.21 billion. Hilariously, BGC commented, "It will be interesting to see if the company offers any forward guidance, as our view is that given the string of missed forecasts, it may be best for the company to stop that practice."
  
  Actually, BGC put out a pretty great report, so today's treat is that it will get as little editing as possible. If you can't tell, they're a little bearish: "It is possible that shares may even have a small relief rally if there are any positive signs in the report but we do not expect any lift to last. While the company is expected to give an update on its new product models and outlook, it is worth noting that the equity market is currently pricing RIMM to destroy value as shares are trading below its book value of $18.92 per share...While the company is banking on its next generation operating system, which was briefly called BBX before being changed to Blackberry 10 due to trademark issues, we raise the question: 'Why should we think the platform is going to get traction?' Users purchase ecosystems, not just phones, and there is little reason to see that an ecosystem is going to build around this operating system."

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out RIM's past performance at Streetinsider's RIM's Income Statement.

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