RIM’s Q2 release
Posted Sep 16, 2010 03:59:22 AM.
This article is more than 5 years old.
Research in Motion will release its second quarter fiscal results later today. It’s been a challenging summer for the BlackBerry-maker as it faced security concerns in Asia and the Middle East, increased competition in the consumer smartphone market thanks to Google’s Android software and an underwhelming debut of its new BlackBerry Torch — all while share prices were falling more than 20 per cent. Twenty-four analysts have cut their targets on RIM stock, including six this month. Shares closed yesterday at $46.71, near the company’s 52-week low of $44.94.
While the pressure is clearly on RIM to prove that it can reverse its recent misfortunes, not everyone is down on the company or the stock. Among them is John Valorzi, Business Editor at Canadian Press, who blames “meteoric growth” at the company for inflating expectations. He still expects RIM to show well today.
“I think they’re going to do better than the previous quarter,” Valorzi says. “On a percentage basis, I think they’ll continue to grow revenues. I don’t see a 24 or 30 per cent growth in revenues but they will add millions of new subscribers.”
Most analysts are expecting shipments of 12-million BlackBerry units during the second quarter and the addition of 5-million new subscribers.
In June, RIM reported first quarter revenues of US$4.24-billion, up from US$3.42-billion in the same period last year. RIM said net income for the quarter was US$768.9-million — a quarterly record for the company — and was up from US$710.1 million in the previous quarter. On top of that, the company shipped 4.9 million new subscribers in the quarter to bring the global BlackBerry user base to about 46 million.
Valorzi says after cornering the corporate market, RIM has had a tough time in the increasingly competitive consumer market.
“It’s just such a tough slog because it’s hyper-competitive,” Valorzi notes. “And you know how consumers are — they’re fickle.”
Valorzi insists RIM “will do well” in the quarter, particularly overseas where numbers have always tended to be strong. The emerging battleground, though, is in North America where the consumer smartphone wars are really being waged.
Here’s what some analysts are saying ahead of today’s release:
“There is no doubt RIM faces stiff competition but we continue to point out that the company has more than sufficient assets to compete effectively.” Gus Papageorgiou, Scotia Capital
“The intensifying competition, we believe, is baked into the stock and our view is that RIM can still grow units.” Steven Li, Raymond James
“This quarter is going to be the first real test for RIM. People are expecting between 50% and 60% growth in international markets and I think this might be the first quarter where you actually see RIM come maybe at or lower than the consensus.” Sameet Kanade, analyst with Northern Securities Inc. in Toronto.
