Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) shares soared in late morning trades after reports of raised estimates for the company’s third quarter. Shares were up as much as 6 percent at one point before settling down.
Jefferies increased its third fiscal quarter estimates for Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) from $2.5 billion up to $2.7 billion. The firm also raised its price target to $13 per share. Analysts at Jefferies said they were “surprised” that their recent checks indicated “higher levels of support after developers got their hands on the SDK and dev alpha units.” Although Research In Motion Limited (NASDAQ:RIMM)’s sales trends are still not great, it is clear that management is looking to emerging economies for increases in sales.
Jefferies analysts said they see potential licensing deals on the horizon for the Blackberry 10, although that depends on whether the launch of the smartphone is successful. Also if mobile carriers provide adequate support, the BB10 would have a 20 to 30 percent probability of success. On the upside of this stock, the BB10 could launch successfully and bring significant increases in sales, better operating leverage, and licensing opportunities. But on the downside, the phone could be a failure, and competition could be “even fiercer than expected.” Also a potential takeover could occur.
Strong smartphone sales as a whole have meant good news not only for RIM, but also for other smartphone makers. Jefferies analysts also looked at other mobile device makers and noted that “smartphone volumes are maturing” and pricing is “tailing off.”
The sales reports on the iPhone 5 are strong, and Samsung Electronics Co., Ltd (LON:BC94) is also gaining market share within the industry. In fact Samsung’s Galaxy S III actually tied with the iPhone 5 in Jefferies’ survey of most-requested phones. Also the strength of Nokia Corporation (NYSE:NOK)’s Lumia smartphones has led them to believe that Microsoft Corporation (NASDAQ:MSFT)’s Windows 8 smartphones could become the “third smartphone ecosystem.”