Hmmm… Not good Monday morning news for RIM today. Reuters is reporting that Barclays Capital has cut its price target on RIM from $90 to $60, and global handset sales in 2009 from 3% growth to 5% decline. Barclays also cut its smartphone growth estimate to 25% from 40%.
Barclays analyst Jeff Kvaal cut his estimates on RIM, citing the slowing demand for smartphones, offset partially by the company’s third-quarter phone launches.
“RIM’s four new device launches should partially balance the weak market,” Kvaal wrote in a note to clients.
RIM is trading right now just below the $42 mark, after opening this morning at $39.50.
Speaking at an investor conference earlier today, RIM co-CEO Jim Balsillie said the current market environment is rife with challenges that require careful planning.
“This is a more intense time than I’ve ever known — more variables, more need to navigate, more hands on the wheel, eyes on the road right now,” he said. “If you don’t, you do it at your peril.”
Based on the news we posted a few days ago, investors can’t agree on whether RIM is in a prime position for growth or ‘chasing Apple’. However, most agree that the current economic downturn will have a negative effect on sales.
UBS Investment Research analyst Jeffrey Fan cut his RIM revenue and earnings estimates today to reflect lower sales during the slowdown.
It’s not uncommon to find two opposing financial analysts on RIM’s stock in even the best of times, so it should come as no surprise that during the current global economic crisis we can’t get two analysts to agree on anything.
First we have Apple shareholder Howard Lindzon of Knight’s Bridge Capital, who is not so much down on RIM as he is long on Apple. However, he does state that RIM is “chasing Apple”, and should not cannibalize their sales with the BlackBerry Bold and Storm, but rather focus on improving the BlackBerry Curve. Hmmm. (via Yahoo!)
Sprint has posted its Q3 2008 financial results, and the numbers show a sad consistency with previous quarters: fewer customers and less revenue. Sprint’s overall revenue fell 12% to $8.81 billion from $10.04 billion a year ago, while total wireless customers dropped by 1.3 million in Q3, bringing the tally to 3.5 million customers lost since Q3 2007.
You can see the full financial release after the jump or download a PDF version at the link below with tables and charts.
Woo boy, I guess I was a little more right than I thought about more bad economic news; this time it hits a little closer to home.
Canadian telecommunications equipment manufacturer Nortel Networks has posted a loss of US$3.4 billion in Q3 2008, it’s largest loss in the past seven years. Revenue was down 14% year over year to US$2.32 billion and 1% year-to-date.
Commenting on the market dynamics, Nortel President and Chief Executive Officer Mike Zafirovski said: “In September, we signaled our view that a slowdown in the market was taking place. In the weeks since, we have seen worsening economic conditions, together with extreme volatility in the financial, foreign exchange and credit markets globally, further impacting the industry, Nortel and its customers. We are therefore taking further decisive actions in an environment of decreased visibility and customer spending levels.”
Nortel also announced plans to cut a further 1,300 jobs, on top of a previous round of cuts of 1,200 staff. About a quarter of the job cuts will occur this year, with the rest in 2009. None of the remaining staff will receive pay rises in 2009, unless already agreed. The cost savings are expected to reduce annual gross costs by approximately US$400 million in 2009.
Considering the current state of the global economy, expect more news of this sad nature in the coming weeks. Carrier Vodafone is expected this week to announce a substantial job cut of its European workforce aimed at generating savings of £1 billion (US$1.6 billion). This news comes in addition to previous warnings from Vodafone that their sales have remained difficult in its UK and Spanish markets. Vodafone is expected Tuesday to post a half-year operating profit of £5.7 billion on sales of £19.8 billion.
“Whether they set a target now or in May, there will have to be a cost plan,” Terence Sinclair, telecoms analyst at Citigroup told the Sunday Times newspaper. “£1 billion is just 3% of sales.”
Hopefully big sales of the BlackBerry Storm 9500 following its launch on the 14th will help to save a few jobs for our European friends.
Speaking at an investor conference earlier today, RIM co-CEO Jim Balsillie said the current market environment is rife with challenges that require careful planning.
Sprint has posted its Q3 2008 financial results, and the numbers show a sad consistency with previous quarters: fewer customers and less revenue. Sprint’s overall revenue fell 12% to $8.81 billion from $10.04 billion a year ago, while total wireless customers dropped by 1.3 million in Q3, bringing the tally to 3.5 million customers lost since Q3 2007. 
Woo boy, I guess I was a little more right than I thought about 
Considering the current state of the global economy, expect more news of this sad nature in the coming weeks. Carrier Vodafone is expected this week to announce a substantial job cut of its European workforce aimed at generating savings of £1 billion (US$1.6 billion). This news comes in addition to previous warnings from Vodafone that their sales have remained difficult in its UK and Spanish markets. Vodafone is expected Tuesday to post a half-year operating profit of £5.7 billion on sales of £19.8 billion.
