Q4 Preview: Research In Motion (RIMM) Under Pressure from Competitors But Could Fall Back On International Expansion

Research In Motion (Nasdaq: RIMM) is trading higher ahead of the Company's fourth quarter 2011 earnings release, expected out after the market closes. Shares are up 2.9% in midday trading.

Research In Motion is expected to report EPS of $1.75 on revs of $5.63 billion. Last quarter, the Waterloo, ON-based mobile communications company reported EPS of $1.74 on revs of $5.49 billion, beating consensus EPS of $1.64 and revs of $5.39 billion. Looking back at Q410, Research In Motion produced EPS of $1.27 on revs of $4.08 billion, missing consensus views.

Shares gained 13.9% through the quarter, to $66.20 at the end of February. The stock is down about 6% since then, and finished 2010 about 6.2%.

As a simple valuation, Research In Motion trades with a forward P/E of 9.2x FY12 EPS estimates, compared to 12.8x for Apple Inc. (Nasdaq: AAPL) and 10.5x at Nokia (NYSE: NOK).

Data from Bloomberg has 30 analysts with a Buy on Research In Motion, 22 with a Hold, and seven suggesting to Sell. The analyst price target average is $75.50, with a high of $100 and low of $45. Shares have traded in a range of $76.78 - $42.53 over the last 52-weeks.

Summary
Last quarter, Research In Motion guided to Q411 EPS of $1.74 - $1.80 on revs of $5.5 - $5.7 billion, ahead of consensus views calling for EPS of $1.61 and revs of $5.47 billion. Sell-in of 14.5 - 15.0 million units is expected.

• Goldman Sachs recently reiterated their Sell on Research In Motion, following results from Marvell (Nasdaq: MRVL). Goldman said: "Marvell's weak results/guidance support our view that RIM is seeing a negative mix-shift in its business, which is likely to pressure RIM's ASPs and margins and drive downside to Consensus estimates. In particular, we believe RIM's business is shifting dramatically to emerging markets from mature markets as the company is rapidly losing share in North America with Western Europe likely to follow."
  
  Goldman is modeling for ASPs of 9% in FY12 and 13% for FY13 and operating margins of 18.4% in FY12 and 17.7% in FY13.
  
  
• Wedbush is looking for in-line results, with EPS of $1.78 on revs of $5.7 billion. Wedbush is looking for sell-in of 14.8 million units, ahead of the 14.7 million unit consensus outlook. The firm expects ASP of $312, ahead of the consensus of $309.
  
  Wedbush has a Neutral rating and $60 price target on Research In Motion stock.
  
  
• Hudson Securities is looking for EPS of $1.76 on revs of $5.6 billion. Hudson comments: Post MRVL's comments, we believe that RIM is seeing more strength in the low-end International market."
  
  Hudson recently initiated Research In Motion with a Buy rating and price target of $80.

Research In Motion is expected to release their Q411 earnings on Thursday, March 24, 2011, after the 4PN close. Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release.

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