This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Risks Abound for Research In Motion: Analyst

NEW YORK ( TheStreet) -- Every once in a while, a bear needs to roar.

Research In Motion (RIMM) is slated to report its fiscal fourth-quarter results this coming Thursday, and few on Wall Street are expecting much from the troubled BlackBerry maker. Still Citigroup analyst Jim Suva decided to distinguish himself on Friday by detailing a multitude of reasons he believes that things are bound to get worse for the company.

"We believe RIMM's multiple challenges will lead to a combination of share loss in the smartphone market, gross margin compression, higher operating expenses, and EPS that will decline over the next couple of years," he wrote in a note to clients on Friday. "We reiterate our Sell rating. If we are correct with our view that future EPS continues to move lower as time progresses that would imply target prices continue to move lower as time progresses."



Among Suva's chief concerns is that RIM is at risk of missing the back-to-school selling season due to delays in its next QNX-based BlackBerry product launch. On Friday, the company said it plans to distribute prototypes of the BlackBerry 10, its next-generation smartphone, in May but didn't offer any update on when the device would be street ready beyond the prior second half of the year timetable.

"We view this the second-half launch as incremental risk for carrier certification as well as a large new product gap that in our view may cause RIMM to miss back to school selling season in 2012 as products need to be shipped to carriers in July/early August," he wrote.

The company's Playbook tablet product, which has been, to put it mildly, overshadowed by Apple's iPad, is also an albatross, according to Suva, as he believes RIM can't ditch it "because the QNX language is the future of the company which developers & enterprises need to work with."

The Playbook was RIM's first product with an operating system based on the technology it acquired in its deal for QNX Software in 2010. The company was forced to record a pre-tax inventory writedown of $485 million in the third quarter in order to increase promotional activity as it sold just 150,000 Playbooks in the third quarter. For comparison, Apple announced this week that it sold 3 million units of the new iPad in its first weekend of retail availability.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $129.09 0.00%
GOOG $570.66 -0.12%
FB $79.75 0.00%
TSLA $197.32 0.00%
YHOO $44.11 0.00%

Markets

DOW 18,288.63 +155.93 0.86%
S&P 500 2,117.39 +12.89 0.61%
NASDAQ 5,008.0960 +44.5690 0.90%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs