Ticonderoga on Networking & IT Hardware / Derivative Thoughts on RIMM's 4Q Results
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Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Ticonderoga on Networking & IT Hardware / Derivative Thoughts on RIMM's 4Q Results by Brian White
Ticonderoga analyst says, "RIMM's 4Q Sales Miss Historical Seasonality and Consensus - Last night, Research In Motion (Nasdaq: RIMM)(NR) reported 4QFY11 sales of $5.56 billion (up 1% Q/Q) compared to the consensus estimate of $5.64 billion and at the lower end of its 4Q outlook range (i.e., $5.5 billion to $5.7 billion) due to product mix that includes increased business in international markets (52% of 4QFY11 revenue outside North America and the U.K.). The sequential sales growth of 1% is well below the six-year average uptick of up 8%. Also, the company's outlook is weaker than the Street anticipated due to lower than expected revenue and disappointing margins, which we believe will have a ripple effect on the tech supply chain this morning. At the same time, we believe RIMM's challenges speaks to continued momentum for Apple's (Nasdaq: AAPL)(Buy) iPhone 4."
"A Grim Outlook From RIMM as Competitive Pressures Mount - Looking into 1QFY12, RIMM expects revenue in a range of $5.2-$5.6 billion (down 1%-6% Q/Q) vs. the Street estimate of $5.64 billion, with shipments projected at 13.5-14.5 million BlackBerry devices. This wider than normal revenue range takes into consideration some uncertainty in Japan and only 5-6 weeks of PlayBook revenue. At the midpoint of this outlook, sales are expected to fall by 3% Q/Q vs. an 8% six-year average uptick, while BlackBerry units are anticipated to fall by 6% Q/Q compared to a six-year average increase of 12.5%. Although RIMM has high expectations for the second-half of the year as the new PlayBook begins to ramp (launch date is 4/19) and new smartphones are released, we believe pressure from Apple's iPhone and the plethora of new Android-based devices will remain a headwind for RIMM."
Derivative Thoughts on RIMM's Weak Outlook - In light of RIMM's weak 1QFY12 outlook, there will clearly be negative sentiment around the RIMM supply chain this morning, in our view. Within our coverage universe, Celestica (NYSE: CLS)(Buy) has the highest exposure to RIMM at 20% of 4Q10 sales and is most focused on the North American market, while Flextronics (Nasdaq: FLEX)(Sell) generated over 10% of its December quarter revenue from RIMM. Outside of our EMS coverage universe, Jabil Circuit (NYSE: JBL)(NR)(15% of FY10) and Multi-Fineline Electronix (NYSE: MFLX)(NR)(40-45% of FY10) are closely tied to RIMM."
Ticonderoga analyst says, "RIMM's 4Q Sales Miss Historical Seasonality and Consensus - Last night, Research In Motion (Nasdaq: RIMM)(NR) reported 4QFY11 sales of $5.56 billion (up 1% Q/Q) compared to the consensus estimate of $5.64 billion and at the lower end of its 4Q outlook range (i.e., $5.5 billion to $5.7 billion) due to product mix that includes increased business in international markets (52% of 4QFY11 revenue outside North America and the U.K.). The sequential sales growth of 1% is well below the six-year average uptick of up 8%. Also, the company's outlook is weaker than the Street anticipated due to lower than expected revenue and disappointing margins, which we believe will have a ripple effect on the tech supply chain this morning. At the same time, we believe RIMM's challenges speaks to continued momentum for Apple's (Nasdaq: AAPL)(Buy) iPhone 4."
"A Grim Outlook From RIMM as Competitive Pressures Mount - Looking into 1QFY12, RIMM expects revenue in a range of $5.2-$5.6 billion (down 1%-6% Q/Q) vs. the Street estimate of $5.64 billion, with shipments projected at 13.5-14.5 million BlackBerry devices. This wider than normal revenue range takes into consideration some uncertainty in Japan and only 5-6 weeks of PlayBook revenue. At the midpoint of this outlook, sales are expected to fall by 3% Q/Q vs. an 8% six-year average uptick, while BlackBerry units are anticipated to fall by 6% Q/Q compared to a six-year average increase of 12.5%. Although RIMM has high expectations for the second-half of the year as the new PlayBook begins to ramp (launch date is 4/19) and new smartphones are released, we believe pressure from Apple's iPhone and the plethora of new Android-based devices will remain a headwind for RIMM."
Derivative Thoughts on RIMM's Weak Outlook - In light of RIMM's weak 1QFY12 outlook, there will clearly be negative sentiment around the RIMM supply chain this morning, in our view. Within our coverage universe, Celestica (NYSE: CLS)(Buy) has the highest exposure to RIMM at 20% of 4Q10 sales and is most focused on the North American market, while Flextronics (Nasdaq: FLEX)(Sell) generated over 10% of its December quarter revenue from RIMM. Outside of our EMS coverage universe, Jabil Circuit (NYSE: JBL)(NR)(15% of FY10) and Multi-Fineline Electronix (NYSE: MFLX)(NR)(40-45% of FY10) are closely tied to RIMM."
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