Research In Motion Limited (USA) (NASDAQ:RIMM): Low Bar For Q3

Research In Motion Limited (USA) (NASDAQ:RIMM): Low Bar For Q3
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Research in Motion Limited (TSE:RIM) (NASDAQ:RIMM) will reveal third-quarter results on Thursday. This will be the last time the market will get to know the details of RIM’s financials before it launches its much awaited new streak of smartphones in the New Year.

Research In Motion Limited (USA) (NASDAQ:RIMM): Low Bar For Q3

Analysts will thoroughly be observing the company’s cash volume and the total number of subscribers after the BlackBerry-maker surprised in the last quarter with better-than-expected numbers on both heads. For the second quarter, company revealed its cash reserves grew by $100 million to $2.3 billion as of Sept. 1.

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“We want to see their cash balance more or less unchanged quarter over quarter. They’re going to need all that ammunition to promote the BlackBerry 10 globally when they launch it,” said National Bank analyst Kris Thompson. He expects to see subscribers decline by about a million, but cited a surprise in that area could happen again.

Research In Motion Limited (TSE:RIM) (NASDAQ:RIMM) has already stated it anticipates an operating loss in the third quarter, as it is in a transition phase to its next generation of BlackBerry smartphones and completes its cost reduction plan. In the second quarter of 2012, Research In Motion Limited (TSE:RIM) (NASDAQ:RIMM) disclosed that it had 80 million subscribers, an escalation of about 2 million from the preceding three months.

“I modeled down a million last quarter too and (I was) wrong. They’re discounting the units aggressively; they’re blowing out their inventory, so I wouldn’t be too surprised to actually see them grow that subscriber base again. If they can do that and maintain their cash, the stock is going higher,” Thompson said.

Various analysts have upgraded the rating of RIM shrunken stock from around $6 to about $13. Though still a far away from highs near $150 a few years ago, the company’s shares have profited from a gush of impetus and encouraging publicity since the Waterloo, Ont.-based company’s executives started showing off the sleek, touchscreen BlackBerry before its global launch party on Jan. 30, 2013. Helped by a number of analyst upgrades, handset makers’ shares have surged about 125 per cent from its lowest level in about a decade in September.

Technology analyst Bill Kreher at Edward Jones said it’s hard to predict quarterly results going forward, although the launch date for the phones is decided, customers are not yet aware of when they will be available. He is expecting the company to throw some light on that question and also make known a price point. “Any incremental information would be helpful,” he said.

Analysts are not expecting much from the results, which in a way is good for the company.  “I would be shocked if the numbers were higher,” says Richard Tse, an analyst with Cormark Securities Inc. who has a “buy” rating on Research In Motion Limited (TSE:RIM) (NASDAQ:RIMM). “I don’t think (this) is going to be rosy. If it turns out to be, the stock will rip.” Analysts at Morgan Stanley state,  “we continue to see a low probability RIM becomes a viable 3rd mobile OS. We nonetheless believe the stock remains strong into the launch, similar to PALM.” They are Raising bull case to $24 from $13 assuming Long term viability but remain  underweight.



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