Bracing for R-I-M Earnings (RIMM, AAPL)

Research in Motion Ltd. (NASDAQ: RIMM) is set to report earnings at the close today.  The Blackberry smartphone maker is expected to post earnings (from First Call, Thomson Reuters) at $0.83 EPS and $2.82 billion in revenues.  The guidance is going to continue to be more important than the actual earnings.

First and foremost, R-I-M already guided lower for this quarter andtherefor for the year.  RIM said revenue for fiscal Q3 would be $2.75to $2.78 billion, well under the previous forecasts of $2.95 to $3.10billion.  Be sure to note that Wall Street is still unofficially a tadhigher than the company’s own revenue guidance.

RIM also said it would add 2.6 million new subscribers in the period, down from a previous forecast of 2.9 million.

Estimates for the coming quarter numbers are also $0.83 EPS andrevenues are expected to be $2.99 billion.  Next quarter will also markits fiscal year-end.

What we want to note here is that the earnings estimates for the comingquarter have come in even far more for the quarter ahead.  Three monthsago the estimate for next quarter earnings was $1.09 EPS.

Analysts still have price targets up between $55 and $60 over the nextyear, and that is far lower than before.  So what is important toconsider here is whether or not analysts brought down their targetsenough for the coming quarter.

We will be watching closely for reports of the returns on the newBlackberry Storm which was meant to take on the Apple Inc. (NASDAQ:AAPL) iPhone.  It seems that there have been more reports of problems adapting to the screen-type function and that the type functions are more strict than expectations.

Options are set to expire tomorrow, but it looks as though optionstraders are only braced for a move of about $2.20 in either direction.That has been far greater, even on a percentage basis, than in thepast.  It seems like the lowered-guidance took away the thunder fromtoday’s earnings.

With shares right at $40.00 today, this stock is down from $148.13 overthe last year.  So shares have already come off about 72%.  Needless tosay, the expectations for any great report here are already very low.

Jon C. Ogg
December 18, 2008