Worries about RIM's quarter snowball amid sluggish BlackBerry sales

Worries about RIM's quarter snowball amid sluggish BlackBerry sales

Summary: RIM appears to be getting squeezed at the low- and high-ends of the smartphone market.

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Research in Motion has a good chance of missing its quarter for the three months ended Feb. 29 as sales for its low-end and high-end smartphones deteriorate.

These Curves aren't selling the way they used to.

Jefferies analyst Peter Misek said in a research note that there's "a greater than 50 percent chance" that RIM will warn that it will miss estimates. Misek gave RIM a $12 price target. RIM was trading at $13.55 recently.

Wall Street expects RIM to report fiscal fourth quarter earnings of 82 cents a share on revenue of $4.57 billion.

Misek said:

We believe RIM's low-end handset sales trends have continued to deteriorate in North America, Latin America and Europe. In particular, sales in Europe decreased significantly towards the end of the quarter. We believe this is very negative as sales outside of the U.S. had typically been more resilient. Our checks indicate that sales in Asia seem to be okay.

That comment about the low-end smartphone market is notable. The Curve accounts for a lot of volume for RIM. If RIM can't move low-end BlackBerry devices it's unlikely it can hit its 11 million to 12 million unit target. Misek said if RIM does it hits unit mark it may be only because it is selling into the channel but not moving devices through to consumers.

Meanwhile, the high-end smartphones for RIM aren't doing so hot either. Misek said enterprise sales are ok, but the rest of the market is a disaster. And the iPhone 5 launch ahead of BlackBerry 10 is a big issue. "The BlackBerry 10 will also have to compete head-to-head in the second half with Microsoft/Nokia as the Windows 8 platform attempts to become the No. 3 player," he said.

Misek was just the latest sour puss on RIM's quarter. Other analysts are expecting trouble ahead. To wit:

Shaw Wu, an analyst at Sterne Agee, said:

Our supply chain feedback is that BlackBerry continues to lose momentum to iOS and Android while Windows Phone appears to be gaining some traction.

In a research note proclaiming that sell through at RIM is getting "sluggishier and sluggishier," Morgan Stanley analyst Ehud Gelblum said:

Checks from our colleagues in Asia indicate RIM’s supply chain orders slid 45% m/m in Jan and are expected to be flat in Feb, implying CQ1 units could be down 30% q/q as sell-through is weak. We have picked up mounting anecdotal evidence that RIM continues to lose momentum given its lack of major new phone launches until BB10 devices come out in “latter 2012,” while news flow indicates enterprises from Halliburton to U.S. agencies are adopting alternative devices.

Topics: BlackBerry, Mobility, Security

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6 comments
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  • Well I'm glad to hear Windows phone is gaining some traction.

    I also hope RIM manages to pull out of it's current spiral. While I'm certainly not a fan of "commodity" I am a fan of competition and I hope to see a viable RIM as well as Windows Phone.

    Pagan jim
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  • It wont take long for the channel to stop taking units now that

    enterprises and consumers have stopped. RIM missed the boat, they should have jumped on WP back when nokia did and gone enterprise focused while nokia was hitting consumers for their first efforts. RIM should have looked at themselves back then and said you know what we're on a burning platform too and we dont have time to dick around with qnx or anything else. Instead they poured gas on the fire with the playbook and other distractions and instead of being poised for great recovery like nokia they are just standing there hold their empty gas cans while they watch their customers jumps off their burning platform. And then on top of all that they appoint an insider whos big move is "more gas, continue the status quo". If you think losing 75% of your stock price in one year was bad just wait until you lose 75% of what's left.
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    • Not a bad idea

      They could have worked with MS to ensure a quality enterprise-ready product that integrates well with the rest of MS's offerings.
      otaddy
  • Tired old story.

    RIM stopped innovating half a decade ago. They got complacent, they stopped creating, they chose to ignore red flags and threats in the market and they are circling the drain today.

    There's no reason RIM should have embraced Windows mobile or Android like others claim. They had and still have a robust and solid base OS. They just chose to coast along instead of evolving quickly.
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