Higher Expectations into R-I-M Earnings (RIMM, AAPL, NOK, PALM)

Research-in-Motion Ltd. (NASDAQ: RIMM) will be the biggest earnings released this week for tech investors because it will be a direct reflection on rivals Apple Inc. (NASDAQ: AAPL), Nokia (NYSE: NOK), and somewhat on smaller rival Palm Inc. (NASDAQ: PALM).  Earnings are due after the close of trading on Thursday, and we have the Thomson Reuters estimates as $0.94 EPS on $3.42 billion in revenue.  What is interesting is that analysts keep bumping up their targets ahead of the report, and the company gave guidance of $0.88 to $0.97 EPS and revenue  of $3.3 billion to $3.5 billion.

Last week we saw targets raised and positive comments by analysts at Goldman Sachs, UBS, Paradigm, and Genuity.  This is also on the heels of a whole round of upgrades in early April after the company’s prior earnings report.  The long and short of this is that analysts were behind the curve and the company did much better than expected.  The single standout was Canaccord, which downgraded R-I-M, Apple, and Nokia on Monday.  We now have an average price target close to $90.00.

According to Thomson Reuters, these numbers have been slowly creeping higher ahead of the earnings report.  We have already noted this with the positive group of analyst calls.  But the issue is that this is creating a whisper or unofficial earnings estimate of closer to $1.00 EPS.

At the end of last quarter, its BlackBerry subscriber account base was approximately 25 million. It added 3.9 million net new accounts in the prior quarter.  The company’s guidance for this last quarter report was 3.7 to 3.9 million net account subscriber additions.  It also gave a margin forecast of about 43% to 44%.

We’ll be looking for direct trading reactions in Apple (AAPL) and Nokia (NOK), and we’ll even be looking at any reactions in Palm Inc. (PALM).  The release of its new “Tour” smart phone will also have had no bearing on its last quarter, but we may see some general estimates on that and how many of the “Storm” units were sold in the quarter.

Jon C. Ogg
June 16, 2009