There's No Stopping Research in Motion

The company is going strong, with a number of catalysts driving it, analysts say. On Wednesday, its latest quarterly results should illustrate that point.
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SAN FRANCISCO -- In a sluggish economy that is staring at a recession, BlackBerry maker

Research In Motion

(RIMM)

has shown no signs of slowing down.

Last month, RIM raised its guidance for net subscriber account additions for the fourth quarter by approximately 15% to 20% compared to its earlier estimate of 1.82 million account additions on Dec. 20.

When RIM reports its results after the market closes on Wednesday, analysts and investors will be looking for more information on the pace of subscription growth, what's driving it and whether the company can keep rolling at that pace.

So far, analysts say RIM has stayed the course.

The company's performance in the face of a slowing economy will to some extent be an issue on the mind of most investors listening to the company's conference call Wednesday, says Mike Abramsky, an analyst with RBC Capital Markets, which makes a market in RIM shares.

"But at the same time I don't believe the results will suggest a slowdown," he says. "RIM's momentum just continues to be very strong and they have a number of product catalysts that are likely to sustain and drive them forward."

RIM said earlier it expects fourth-quarter revenue in the range of $1.80 billion to $1.87 billion with EPS in the range of 66 cents to 70 cents a share. Total BlackBerry subscriber account base is expected to be about 14 million at the end of the quarter.

Analysts expect the company to comfortably meet its guidance and offer a strong outlook for the current quarter and fiscal year.

For the fourth quarter, analysts expect RIM to earn at least 70 cents a share on revenue of $1.85 billion compared with EPS of 33 cents on revenue of $930.4 million the same quarter a year ago.

"The

analysts' estimates are certainly beatable and haven't gotten ahead, which is what hurt

Oracle

(ORCL) - Get Report

recently," says Abramsky. Oracle saw its shares slip about 7.5% after its third-quarter revenue last week

came up short

of Street expectations.

RIM's guidance, especially around the issue of new subscribers, will hold the key to the stock's performance, says Vivek Arya, an analyst with Merill Lynch, which makes a market in RIM shares.

In the first quarter fiscal 2009, RIM is expected to report EPS of 75 cents on revenue of $2 billion, according to analysts polled by Thomson Financial. For the fiscal year, RIM is expected to post earnings of $3.47 a share on revenue of $9.21 billion.

Analysts also expect 2.15 million new subscribers, almost flat from the previous quarter.

"However, for the stock to work, RIM may need to grow subscribers sequentially, which we believe could prove challenging given the tough comparisons from the prior quarter," says Arya in a research note.

RIM's stock has a very strong positive correlation to its outlook for new subscribers, so merely inline trends in this crucial metric may not be sufficient to satisfy the bulls," he says.

Shares of RIM closed down $3.11, or 2.7%, to $112.23 Monday. The stock has had a rocky ride this year as it fell 26% to a low of $84.10 on Feb. 6 before climbing back. The stock is now just about 1% down since the beginning of the year.

RIM's rivals have fared worse.

Motorola's

(MOT)

stock is down 42% since the beginning of the year and

Apple

(AAPL) - Get Report

, despite the iPhone, has seen a decline of about 26% in market value.

With new products including a touch screen BlackBerry expected this year, RIM is likely to continue beating expectations, Abramsky says.

Wireless carrier

Verizon

(VZ) - Get Report

launched Monday the BlackBerry Curve that is expected to meet the demand at CDMA carriers for a cross-over device that is positioned between the company's 8830 targeted purely at business users and the consumer-oriented Pearl. CDMA carriers such as Verizon account for about 50% of the total mobile subscribers in North America, Abramsky estimates.

"We see a number of products coming across multiple wireless technologies including 3G, and EV-DO that are likely to act as growth catalysts this year," he says.

As for the slowdown, analysts remain confident it is unlikely to take a toll on the company and RIM could demonstrate that with its fourth-quarter results and guidance for the current fiscal year.

"The BlackBerry has become as indispensable as the desktop telephone," says Abramsky.