Research in Motion's fourth quarter will pack a bit of good news---there was no profit warning so perhaps the financials are on track. The bad news: Analysts say the BlackBerry 7 smartphones are "aging rapidly" and the outlook from RIM could be dismal.
Wall Street is expecting fourth quarter earnings of 82 cents a share on revenue of $4.55 billion. For fiscal 2012, RIM is expected to deliver earnings of $4.13 a share on revenue of $18.78 billion.
To put that $4.13 a share of 2012 estimated earnings in perspective remember that RIM had projected net income to "be in excess of $7.50 a share fully diluted" a year ago. That crazy optimism is what cost Jim Balisillie and Mike Lazaridis their co-CEO gigs.
In other words, fiscal 2013 could be a replay of the last year. RIM is hanging on for yet another big launch to save the day. This time, RIM's BlackBerry superphones are the next big thing. Add it up and RIM is stuck in a boom-bust cycle and it's unclear whether new CEO Thorsten Heins' yet-to-be-outlined strategy will save the day.
Barclays analyst Jeff Kvaal said in a research note that RIM lacks new launches. Meanwhile, BlackBerry 7 phones are losing momentum. Add it up and RIM is going to face inventory worries, higher marketing expenses and further market share erosion until BlackBerry 10 devices launch in the fall. "BB7 devices are now close to six months old, and our checks suggest that the initial enthusiasm post launch has tailed off," said Kvaal. "We model 11M unit volumes in F4Q, at the low end of the guidance range."
Kvaal is expecting a "dire outlook."
Morgan Stanley analyst Ehud Gelblum had similar worries. Gelblum is assuming that BlackBerry analysts drained just 1 million new units from RIM's inventory levels. Gelblum said that RIM may ship 10.1 million units in the fourth quarter, down from 14.1 million in the third quarter.
CIBC analyst Todd Coupland was a bit more constructive. Coupland said that international demand seems in line with expectations for the BlackBerry Bold and Curve. Coupland said that shipment data will be critical for RIM. He's expecting RIM to project shipments of 10.4 million in the first quarter.
The biggest worry for RIM going forward is competition. Wedbush analyst Scott Sutherland said in a research note:
With the continued momentum and global expansion of iPhones and Android-based phones, our checks with industry contacts and carriers indicate interest is minimal for BlackBerry phones outside of certain emerging markets. Furthermore, with Window 8 devices coming to the market with Nokia and others, we see increased competition.
Sutherland argued that RIM lacks the content, ecosystem and devices to compete. Pending Heins' master plan it's hard to argue against Sutherland's take.