360-Degree Review of RIM Before Earnings (RIMM, AAPL, GOOG, NOK, MSFT)

Research in Motion Ltd. (NASDAQ: RIMM) is about to come clean on its earnings report.  Needless to say, expectations are low and our take is that anyone who thinks that guidance won’t be “tempered” (at best) for the rest of the year needs an examination.

Before getting into the data, investors are calling for a new way this company is managed.  The dual-role of chairman and CEO is just not working.  The “product launches” would be described as lame.  The dominance in smart phone market share is gone.  And to make matters worse, enterprises are no longer forcing the Blackberry culture.  You can coin a phrase from us, “Crackberry has become Crapberry.”  Sorry, well sort of sorry.

Apple Inc. (NASDAQ: AAPL) for iPhone and Google Inc. (NASDAQ: GOOG) for Android are now getting into the corporate smartphone culture.  What R-I-M does have going for it is data security.  The problem is that consumers for some reason do not seem to care.

The formal earnings estimates (in U.S. dollars rather than in the land of the hockey rioters) are $1.32 EPS and $5.15 billion in revenues from Thomson Reuters.  Next quarter estimates are still $1.40 EPS and $23.39 billion in revenues,

The estimates for fiscal February 2012 ar $6.29 EPS and $$23.39 billion in revenues, representing a 1% drop in earnings on and a 17.5% revenue growth.  Here is the kicker, the official analyst targets for fiscal February-2013 are $6.58 EPS and $25.99 billion in revenues.  Here is our question, “Who the hell still thinks ‘estimates’ are anywhere close to reality?”…. Seriously.

This is why some mistakenly call R-I-M a “Value stock” but this has all of the characteristics of a “value trap” instead.

We will be paying attention to margins and inventory levels outside of the United States.  Our take is that whoever remains as the real CEO needs to try to merge with Nokia Corporation (NASDAQ: NOK) in something to the tune of a merger of equals.  That would give the Microsoft Corporation (NASDAQ: MSFT) muscle behind R-I-M and its new O/S as well as the Windows angle.  It would also act as a force to stop the loss of market share at each company.  That being said, don’t hold your breath for a deal to come.

Shares trade above $35.00 today and the new 52-week trading range is $34.91 to $70.54.  This stock has performed worse and worse since its prior warning.  The fact that the stock has been cut in half and the notion that it somehow trades with unreal multiple of under 6-times earnings does not generate much interest when you overlay the “perception of reality” versus formal math.  As far as the official Thomson Reuters consensus target of $51.74, we’ll leave that up to you to decide if you think it is possible.

So, what is left to say?  The expectation is so bad that it is almost as if the bar is unofficially set so low that it would take something worse than a disaster to kill the stock further.  R-I-M now has a market cap of close to $18 billion.

The chart is too ugly to offer any commentary there.  Options traders appear to be braced for a move of up to $2.00 in either direction.  Frankly, we won’t be shocked if we see a move of $5.00 in either direction.  This situation is just that volatile.

Expect investors to be talking more and more about management changes during or after the Q&A session of the conference call.  For whatever it is worth, there were headlines today that COO Done Morrison is on leave for medical reasons.

JON C. OGG