RIM With a View
In the end, it was the sky-high expectations that did Research In Motion (RIMM) in.
The maker of the BlackBerry phones posted lighter-than-expected fourth-quarter results Wednesday and said it is now the target of a formal investigation by the Securities and Exchange Commission over its stock option grant practices.
Also, the company's guidance was cautiously optimistic.
RIM's stock took a hit on the news. On Thursday, disappointed investors sent shares of the company down $11.10, or 7.6%, to $134.97.The expectations were too much for RIM to handle, says Matt Kelmon, portfolio manager with Kelmoore Investment Company, which has a position in RIM. "We saw more than a 20-point rise in the stock from mid-March, and unless there was some absolutely fantastic news and huge, huge earnings, RIM's rise would be unsustainable," he says. For the fourth quarter, revenue jumped 66% to $930.4 million from $561.2 million a year earlier. The company posted earnings of 99 cents a share. Analysts were looking for earnings of $1 a share on revenue of $935.4 million. "Still, a 66% rise in sales is absolutely fantastic, and their subscriber numbers remain strong but the numbers were lighter than what analysts had been looking for," says Kelmon. "So it's about whether you want to view the glass as half full or empty."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV