Wall Street Unamused with RIM's (RIMM) Lack of Progress, Sees FY12 EPS Estimates at Risk
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Price: $14.64 +12.36%
Rating Summary:
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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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Shares of Research In Motion Limited (Nasdaq: RIMM) are under intense pressure Friday following mixed fourth-quarter results and disappointing first-quarter guidance after the close on Thursday.
The BlackBerry maker reported Q4 EPS of $1.78, $0.03 better than the analyst estimate of $1.75. Revenue for the company rose 36 percent to $5.6 billion in the three-month period ended February 26, compared to the market consensus of $5.63 billion.
While the fourth quarter was essentially in-line with what investors had expected, the important first-quarter forecast, which will see the launch of RIM's PlayBook tablet, was disappointing. RIM said it sees earnings of $1.47-$1.55 per share, missing the Street's view of $1.65 per share.
For the full year 2012, however, guidance was stronger. The company sees earnings over $7.50 per share, compared to the Street's view of $6.81. Although the company firmly gave this internal guidance, Wall Street is not convinced that it will achieve this number and believes it will have to come down. Even some of the most bullish RIM analysts see 2012 below this "aggressive" figure.
Wall Street analyst assessments of the results were mostly negative, although a few bulls hang on.
Perhaps the most negative sentiment this morning came from an analyst at Detusche Bank, which cut shares from Hold to Sell and their price target from $60 to $50.
The firm no longer sees RIM's QNX operating system as a viable competitor in the market. "With no QNX on handsets until CY12, we think RIM will likely continue to lose share to Android smartphones whose prices are rapidly falling," analyst Brian Modoff said. "We believe fully-powered Android phones will be available for $100 by early 2012, and this will threaten RIM’s growth in all markets," he also states.
The firm also believes one part of the problem is the co-CEO structure, which has led to multiple operating systems and the building of duplicate working groups in many areas. Deutsche Bank sees RIM earning just $6.76 per share for FY12.
Goldman Sachs, which has been a bear on the stock for some time took a victory lap, saying the poor Q1 guidance supports their long-standing view that Street's estimates will decline significantly as a result of lower than expected ASPs and margins.
Goldman left its FY12 EPS estimate unchanged at $5.77, while cutting its price target from $63 to $57.
Still the bulls held out hope.
Credit Suisse said the stock is too cheap, arguing RIM trades at a P/E multiple of 6.6x their FY13 EPS estimates, while perhaps weaker competitor Nokia (NYSE: NOK) trades at 12.5x. The firm retained its Outperform rating, saying they see 50 percent upside to their $85 price target. However even this bullish analyst sees FY12 EPS of only $7.10, which is well below RIM’s $7.50 view.
The BlackBerry maker reported Q4 EPS of $1.78, $0.03 better than the analyst estimate of $1.75. Revenue for the company rose 36 percent to $5.6 billion in the three-month period ended February 26, compared to the market consensus of $5.63 billion.
While the fourth quarter was essentially in-line with what investors had expected, the important first-quarter forecast, which will see the launch of RIM's PlayBook tablet, was disappointing. RIM said it sees earnings of $1.47-$1.55 per share, missing the Street's view of $1.65 per share.
For the full year 2012, however, guidance was stronger. The company sees earnings over $7.50 per share, compared to the Street's view of $6.81. Although the company firmly gave this internal guidance, Wall Street is not convinced that it will achieve this number and believes it will have to come down. Even some of the most bullish RIM analysts see 2012 below this "aggressive" figure.
Wall Street analyst assessments of the results were mostly negative, although a few bulls hang on.
Perhaps the most negative sentiment this morning came from an analyst at Detusche Bank, which cut shares from Hold to Sell and their price target from $60 to $50.
The firm no longer sees RIM's QNX operating system as a viable competitor in the market. "With no QNX on handsets until CY12, we think RIM will likely continue to lose share to Android smartphones whose prices are rapidly falling," analyst Brian Modoff said. "We believe fully-powered Android phones will be available for $100 by early 2012, and this will threaten RIM’s growth in all markets," he also states.
The firm also believes one part of the problem is the co-CEO structure, which has led to multiple operating systems and the building of duplicate working groups in many areas. Deutsche Bank sees RIM earning just $6.76 per share for FY12.
Goldman Sachs, which has been a bear on the stock for some time took a victory lap, saying the poor Q1 guidance supports their long-standing view that Street's estimates will decline significantly as a result of lower than expected ASPs and margins.
Goldman left its FY12 EPS estimate unchanged at $5.77, while cutting its price target from $63 to $57.
Still the bulls held out hope.
Credit Suisse said the stock is too cheap, arguing RIM trades at a P/E multiple of 6.6x their FY13 EPS estimates, while perhaps weaker competitor Nokia (NYSE: NOK) trades at 12.5x. The firm retained its Outperform rating, saying they see 50 percent upside to their $85 price target. However even this bullish analyst sees FY12 EPS of only $7.10, which is well below RIM’s $7.50 view.
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