BlackBerry Maker's Next Quarter Looks Solid - TheStreet

Research In Motion

(RIMM)

, which is set to report fiscal second-quarter results after Thursday's closing bell, may meet Wall Street's expectations, but analysts are already looking ahead to the third quarter and its new product launches.

Research In Motion, or RIM, has been a darling among business consumers with its ubiquitous BlackBerry, but not necessarily with investors. Although the stock surged a whopping 160% in 2007, shares have fallen nearly 12% in 2008 amid increased competition and a global economic slowdown that has led many industry observers to believe that users have held off replacing their old BlackBerries.

For that reason, the company's fiscal second-quarter earnings report becomes an important picture on how consumer spending is holding up and how RIM is faring against

intense competition

.

For the quarter, RIM is expected to post a profit of 87 cents a share on revenue of $2.59 billion, according to a poll of analysts conducted by Thomson Reuters. If RIM were to match expectations, it would represent nearly a 90% jump in revenue from a year ago.

The average analyst estimate for the quarter falls in line with RIM's previous projections. In its first-quarter report, the company said revenue for the second quarter should fall in the range of $2.55 billion to $2.65 billion and a profit in a range of 84 cents a share to 89 cents a share.

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However, the company's fiscal third-quarter guidance will certainly prove more useful to investors interested in how RIM thinks its new offerings -- the upcoming touch-screen

BlackBerry Storm

, the Kickstart fliphone and the Javelin -- will perform. For the third quarter, analysts are already expecting a profit of 98 cents a share and a 75% jump in revenue from last year to $2.92 billion.

Mike Abramsky, research analyst with RBC Capital Markets, is already expecting RIM to top the Street's estimates for the third quarter, projecting revenue of $3 billion to $3.1 billion and earnings of $1 a share to $1.03 a share, mostly thanks to shipments of RIM's new handsets.

"Our third-quarter outlook is based on 7.5 million device shipments (up 20% quarter over quarter), which includes 1.35 million units (18% of total) sell-in of new handsets," Abramsky writes in a research note.

He also cites the new Blackberry Bold as a big catalyst for the third quarter. Already launched in other markets, the Bold is expected to launch on

AT&T's

(T) - Get Report

high-speed 3G network in October.

"The 3G Bold is expected to drive a mini-upgrade cycle in North America (40% base not yet upgraded from older Blackberries) and increase RIM penetration in Europe where 3G is more competitively and widely available," Abramsky writes.

TheStreet.com Gets Bold

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Tero Kuittinen, senior director of research with Global Crown Capital, agrees that RIM's guidance for the fiscal third quarter should be solid, considering the unveiling of the new touch-screen Blackberry Storm.

"When a lot of fans of your brand have been waiting for essentially a year to finally get their paws on a hot new feature, you could trigger a very robust early rush of buying when you finally get the product out," Kuittinen says. "It's an interesting setup, because both RIM and Nokia have been slow to integrate advanced display tech into their models."

Kuittinen also argues that markets are sensing a possible discontinuity moment in consumer spending in the August/September period, after warnings from other consumer tech companies like

Dell

(DELL) - Get Report

and

Nokia

(NOK) - Get Report

as well as weak U.S. video game sales growth for August.

"I am fairly certain the guidance is going to eclipse the results to an unusual degree," Kuittinen says. "The Street craves any new info on how September is developing and what that might indicate about the last three months of the calendar year. I would think that investor fear is now so thick that even tolerable guidance will be received with relief."

Kuittinen says he is also curious about how the BlackBerry Bold will perform, given the new 2.6-inch display and QWERTY keypad, which he believes will be a key differentiator to separate the Bold from

Apple's

(AAPL) - Get Report

iPhone 3G.

"The Bold should slake the consumer thirst for advanced display technology while avoiding direct competition with the iPhone by focusing on heavy texters/emailers," Kuittinen says. "That should be a tactical advantage big enough to create strong fall sales."

Abramsky says that focusing on "RIM vs. Apple" argument neglects to take into account the opportunity both companies have to take share from incumbent handset vendors like Nokia and

Motorola

(MOT)

, especially with smartphone uptake accelerating on lower handset and data pricing.

However, the battle lines have been drawn in the enterprise market between the BlackBerry and the new iPhone, which now allows business users to sync email from

Microsoft's

(MSFT) - Get Report

Exchange servers. Abramsky says that data from the second quarter on enterprise use will likely influence trading.

"While larger enterprises appear to be stretching upgrade cycles, this impact appears to be mitigated by increased business adoption of mobile devices for

return on investment, cost reduction, new mobile applications and sales capture, along with telecom cost-reduction initiatives," Abramsky says.