Subscriber Numbers To Dominate Research In Motion Earnings (RIMM, AAPL, PALM)

After today’s close we’ll get to see earnings out of Research In Motion Ltd. (NASDAQ: RIMM). The estimates have been ratcheted up a bit, but only ever so slightly since last week. The estimates from First Call are $0.70 EPS on $1.86 billion in revenues.  Next quarter estimates are $0.76 EPS on $2.02 Billion in revenues. Estimates for fiscal Feb-2009 are $3.49 EPS on $9.26 Billion in revenues.

R-I-M raised its guidance late in February, despite concerns seen elsewhere in the sector, with a new target of roughly 14 million subscribers for the quarter end.  When R-I-M gave its update, it put revenue in the $1.80 to $1.87 Billion range and said it saw $0.66 to $0.70 per share diluted; First Call had estimates at the time as $1.85 Billion revenues and $0.69 EPS, both are under today’s estimates.  Shares were at $104.55 after the pop from the news of its guidance hike.  Shares closed Friday at $115.34, and mid-day today shares sit north of $118.00. 

Last week the analyst target was north of $136.00 and today that stands above $137.00 after some target raises over the last three days.  This may be a bit off depending on the moment, but as of a static pricing right now, it appears that options traders are braced for a move of up to about $9.50 in either direction.  R-I-M still sits well above some of its key longer-term moving averages: 200-day moving average today is $95.22 and the 50-day moving average today is $100.48. 

Palm Inc. (NASDAQ: PALM) is now hardly a footnote despite having sold 1 million of its $99 Centro smartphones.  The thought had been that Apple Inc. (NASDAQ: AAPL) was going to release its 3G version of the iPhone later in the year.  Now some data points to May, although that still varies.  There is a quasi-consensus belief that R-I-M will have another dominant two quarters of being the smart phone leader on the enterprise level; and whether Apple’s 3G iPhone will ever truly challenge the enterprise spending is another issue entirely.

Regardless of R-I-M’s news, it frequently sees large stock price moves either way on post-earnings news.

Jon C. Ogg
March 30, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at [email protected]; he does not own securities in the companies he covers.