RIM (RIMM) Shocks Wall Street with Better Numbers, But Things Much the Same
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Price: $14.64 +12.36%
Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
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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Wall Street analysts are weighing in on Research In Motion Ltd. (NASDAQ: RIMM) following last night's smaller-than-expected loss, which has shares ripping 17 percent in pre-open trading.
RIM reported Q2 EPS of ($0.27), $0.19 better than the analyst estimate of ($0.46). Revenue for the quarter came in at $2.9 billion versus the consensus estimate of $2.5 billion. Importantly, RIM generated about $100 million in free cash flow. RIM sold 7.4 million BlackBerries in the quarter.
Goldman Sachs - "RIM posted a rare beat amidst a string of wide misses, as the company is in all-out execution mode to transition to its next-generation BlackBerry 10 (BB10) platform, which remains on track for C1Q. The upside was largely driven by much stronger than expected ASPs, which came in at $229 (up 11% qoq, though still down 18% yoy), well ahead of our estimate of $177... RIM commented that it has met with 40 carriers in 16 countries so far, with more to come, to market its BB10 products (including a QWERTY and a touch device) and has received positive feedback, which is consistent with our reaction to the features unveiled at the BB Jam event earlier this week." Maintain Neutral, $9 price target.
Needham & Company - "The company proved it could hang on, selling BlackBerry 7s and generating positive cash flow. But we continue to see the story as binary. We believe BlackBerry 10 could make or break the company." Maintains Hold.
Jefferies - "Mgmt surprised us with impressive execution; however, we believe this was due to aggressive promotions, upgrade programs, and was ultimately at the expense of subscriber ARPU. We believe FQ3 (Nov) will face tougher headwinds due to the iPhone 5 and other competition. As management continues its strategic review, we believe an acquisition or licensing is unlikely before BB10." Reiterate Underperform rating and $5 price target.
Scotiabank - Stable to improving operation raise odds of a takeover bid. Upgrades to Sector Perform.
Wells Fargo - "FQ2 results were better than feared and beat our estimates on revenue, device shipments, and device ASP. We expect RIMM's business to continue to be under pressure during the rest of the year due to competitive launches and RIMM's lack of a competitive high-end smartphone." Maintains Market Perform, $7-8$ valuation range.
Citi - Says better than expected results may not be enought to spur a turnaround, although short covering could boost the stock near-term. Maintains Sell, $5 target.
Oppenheimer - "RIM reported better than expected results reflecting good international subscriber growth, a favorable mix of Bold shipments (driving an ASP increase), and effective cost/balance sheet management. The better operational execution should help preserve more of a base into the BB10 launch next year. However, BB shipments are still decreasing QoQ and mix is shifting toward lower ARPU subscribers. Overall, we expect the business to continue to bleed over time with losses to Apple's iPhone and a stronger Android eco-system. We're also cautious of RIM delivering a sustainable recovery post-BB10's launch. We'd view share strength post-earnings as an opportunity to take money off the table." Maintain Perform with a negative bias.
Nomura - "We continue to forecast a sustained rate of sequential decline in revenue, albeit from a higher base of devices in Q2. Estimates move higher to reflect strong Q2, but we still do not forecast a material turn-around in sales even after the launch of BB10. While Q2 results were better than expected, we do not believe that they materially improve the outlook for RIM. We still believe that RIM’s future remains tied to BB10. We see no compelling reason to own RIM at this point, while acknowledging that valuation is unambitious and M&A risk remains a possibility." Maintains Neutral, price target up from $6.30 to $7.25.
Wedbush - "While encouraged by modest cash generation and growth outside the U.S., we remain cautious on RIM given its integrated strategy greatly lags Apple and given the lack of a compelling ecosystem. While BB10 devices that are still expected in early 2013 and could buy the company additional time, we believe a meaningful strategy shift is needed to unlock shareholder value." Maintains Neutral, $7.50 target.
Deutsche Bank - "While the company is on track with its CORE program and the BB10 platform looks promising, we think they still have significant challenges in the form of BB10 app developer support and the conversion of their current user base to an entirely new platform." Maintains Hold, $8 target.
Sterne Agee - "RIMM reported higher revenue and a much smaller operating loss thanks to what we thought were overly pessimistic expectations. For the 2nd quarter in a row, company grew its cash with working capital management. Our concern remains sustainability with receivables declining by $1 billion over the last 2 quarters and its core operation still losing money. BB10 is on track to ship in 1Q13 but profitability remains unclear and we're not sure if it will be effective vs. iOS, Android, and Windows" Maintains Neutral rating.
TD Securities - "Nothing in our thesis has changed. We are still concerned that the device business is running negative gross margins as RIM aggressively pushes aging in-market devices. We continue to model a significant decline in services ARPU (infrastructure access fees) despite results in Q2 that were again better than expected... There is no change to the BlackBerry 10 timeline (calendar Q1) – part of our hesitation on the stock is the onslaught of competitive devices expected to hit the market, ahead of RIM's launch." Maintains Hold, $9.50 target.
Canaccord Genuity - "While results beat our expectations and we were impressed by RIM management's cost savings and working capital management to preserve the balance sheet, our bearish thesis on BB10 remains unchanged and we expect continued losses in coming quarters." Maintains Hold, $8 price target.
MKM Partners - "We reiterate our Neutral rating as RIMM shows signs of life but still faces a difficult road. The company turned in a clean 2QFY13 beat with subscribers, units, ASPs, revenues, margins and earnings all exceeding expectations. BlackBerry 7 is finding some level of market demand, channel inventories are lean and management has kept expectations for 3QFY13 very low. The real test will come in 4QFY13 and 1QFY14 after BlackBerry 10 is launched since the success of this platform will determine the long-term fate of the company and stock. Prior to this week, we gave RIMM a 5%-10% chance of making it as a viable mobile OS and hardware device supplier. Following the BlackBerry Jam Americas developers’ conference and the 2QFY13 earnings report, we now believe the company has a 20%-30% chance of making it as a profitable going concern." Maintains Neutral, raises price target from $8 to $9.
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 $7.14 yesterday.
RIM reported Q2 EPS of ($0.27), $0.19 better than the analyst estimate of ($0.46). Revenue for the quarter came in at $2.9 billion versus the consensus estimate of $2.5 billion. Importantly, RIM generated about $100 million in free cash flow. RIM sold 7.4 million BlackBerries in the quarter.
Goldman Sachs - "RIM posted a rare beat amidst a string of wide misses, as the company is in all-out execution mode to transition to its next-generation BlackBerry 10 (BB10) platform, which remains on track for C1Q. The upside was largely driven by much stronger than expected ASPs, which came in at $229 (up 11% qoq, though still down 18% yoy), well ahead of our estimate of $177... RIM commented that it has met with 40 carriers in 16 countries so far, with more to come, to market its BB10 products (including a QWERTY and a touch device) and has received positive feedback, which is consistent with our reaction to the features unveiled at the BB Jam event earlier this week." Maintain Neutral, $9 price target.
Needham & Company - "The company proved it could hang on, selling BlackBerry 7s and generating positive cash flow. But we continue to see the story as binary. We believe BlackBerry 10 could make or break the company." Maintains Hold.
Jefferies - "Mgmt surprised us with impressive execution; however, we believe this was due to aggressive promotions, upgrade programs, and was ultimately at the expense of subscriber ARPU. We believe FQ3 (Nov) will face tougher headwinds due to the iPhone 5 and other competition. As management continues its strategic review, we believe an acquisition or licensing is unlikely before BB10." Reiterate Underperform rating and $5 price target.
Scotiabank - Stable to improving operation raise odds of a takeover bid. Upgrades to Sector Perform.
Wells Fargo - "FQ2 results were better than feared and beat our estimates on revenue, device shipments, and device ASP. We expect RIMM's business to continue to be under pressure during the rest of the year due to competitive launches and RIMM's lack of a competitive high-end smartphone." Maintains Market Perform, $7-8$ valuation range.
Citi - Says better than expected results may not be enought to spur a turnaround, although short covering could boost the stock near-term. Maintains Sell, $5 target.
Oppenheimer - "RIM reported better than expected results reflecting good international subscriber growth, a favorable mix of Bold shipments (driving an ASP increase), and effective cost/balance sheet management. The better operational execution should help preserve more of a base into the BB10 launch next year. However, BB shipments are still decreasing QoQ and mix is shifting toward lower ARPU subscribers. Overall, we expect the business to continue to bleed over time with losses to Apple's iPhone and a stronger Android eco-system. We're also cautious of RIM delivering a sustainable recovery post-BB10's launch. We'd view share strength post-earnings as an opportunity to take money off the table." Maintain Perform with a negative bias.
Nomura - "We continue to forecast a sustained rate of sequential decline in revenue, albeit from a higher base of devices in Q2. Estimates move higher to reflect strong Q2, but we still do not forecast a material turn-around in sales even after the launch of BB10. While Q2 results were better than expected, we do not believe that they materially improve the outlook for RIM. We still believe that RIM’s future remains tied to BB10. We see no compelling reason to own RIM at this point, while acknowledging that valuation is unambitious and M&A risk remains a possibility." Maintains Neutral, price target up from $6.30 to $7.25.
Wedbush - "While encouraged by modest cash generation and growth outside the U.S., we remain cautious on RIM given its integrated strategy greatly lags Apple and given the lack of a compelling ecosystem. While BB10 devices that are still expected in early 2013 and could buy the company additional time, we believe a meaningful strategy shift is needed to unlock shareholder value." Maintains Neutral, $7.50 target.
Deutsche Bank - "While the company is on track with its CORE program and the BB10 platform looks promising, we think they still have significant challenges in the form of BB10 app developer support and the conversion of their current user base to an entirely new platform." Maintains Hold, $8 target.
Sterne Agee - "RIMM reported higher revenue and a much smaller operating loss thanks to what we thought were overly pessimistic expectations. For the 2nd quarter in a row, company grew its cash with working capital management. Our concern remains sustainability with receivables declining by $1 billion over the last 2 quarters and its core operation still losing money. BB10 is on track to ship in 1Q13 but profitability remains unclear and we're not sure if it will be effective vs. iOS, Android, and Windows" Maintains Neutral rating.
TD Securities - "Nothing in our thesis has changed. We are still concerned that the device business is running negative gross margins as RIM aggressively pushes aging in-market devices. We continue to model a significant decline in services ARPU (infrastructure access fees) despite results in Q2 that were again better than expected... There is no change to the BlackBerry 10 timeline (calendar Q1) – part of our hesitation on the stock is the onslaught of competitive devices expected to hit the market, ahead of RIM's launch." Maintains Hold, $9.50 target.
Canaccord Genuity - "While results beat our expectations and we were impressed by RIM management's cost savings and working capital management to preserve the balance sheet, our bearish thesis on BB10 remains unchanged and we expect continued losses in coming quarters." Maintains Hold, $8 price target.
MKM Partners - "We reiterate our Neutral rating as RIMM shows signs of life but still faces a difficult road. The company turned in a clean 2QFY13 beat with subscribers, units, ASPs, revenues, margins and earnings all exceeding expectations. BlackBerry 7 is finding some level of market demand, channel inventories are lean and management has kept expectations for 3QFY13 very low. The real test will come in 4QFY13 and 1QFY14 after BlackBerry 10 is launched since the success of this platform will determine the long-term fate of the company and stock. Prior to this week, we gave RIMM a 5%-10% chance of making it as a viable mobile OS and hardware device supplier. Following the BlackBerry Jam Americas developers’ conference and the 2QFY13 earnings report, we now believe the company has a 20%-30% chance of making it as a profitable going concern." Maintains Neutral, raises price target from $8 to $9.
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 $7.14 yesterday.
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