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Now Seems Like a Great Time to Buy RIMM Stock

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RIMM

RIMM stock took a pretty incredible nose dive yesterday after the quarterly conference call. Investors have been really bearish on the stock for a few reasons including:

1) Initial reviews of the PlayBook
2) Worldwide shipments are slowing
3) Lack of ability to create hyped launches
4) Rumored carrier support withdrawal
Continue reading ‘Now Seems Like a Great Time to Buy RIMM Stock’

RIM stock affected by Nortel rejection during bankruptcy auction

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RIM stock fell 1.43% to $81.99, after Nortel rejected their offer for CDMA and LTE technology being auctioned due to Nortel’s failing business.

The auction is part of bankruptcy protection proceedings and Nortel is claiming that RIM had refused to comply with the court approved procedures.

Overall, Canadian stocks are doing well, and the US economy is showing signs of stabilizing. Federal Reserve Chairman Ben S. Bernanke is optimistic, as all three major indexes in the US closed in positive territory.

The S&P 500 was up 3.45 points, or 0.36%, to 954.58 and the NASDAQ composite index closed at 1,916.20, up 6.91 points, or 0.36%.

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Research in Motion is selling copious smartphones despite economy

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A lot of the information I am about to post has already been described in previous stock market and share analysis reports. I am reposting this because the numbers are presented in various ways and it’s nice to get a reminder that the economy isn’t in total shambles.

That being said, RIM has sold its 50 millionth BlackBerry! While everyone is talking about these TETs (tough economic times), RIM isn’t blinking and continuing to sell smartphones and saturate the market with hands-down the best device.

RIM reported record high revenue of US$3.46 billion in their most recent quarter, up 84 percent compared to the same time last year, as it shipped 7.8 million devices, also a new high for the company. Net profit for the quarter rose to $518.3 million, up from $412.5 million last year. RIM has also added 3.9 million new BlackBerry subscribers!

Smartphone sales are a sure bet these days. Surveys of family expenditures during the holidays report that half of respondents say they would buy electronic devices before the end of the year. Expect many of these electronic devices to be smartphones.

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Research in Motion (RIM) financial analysis update

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The Financial Post Trading Desk is reporting that RIM’s first-quarter revenue is estimated to come down to US$3.1-billion on seven million new units shipped.

Raymond James & Associates is giving an Outperform rating on RIM stock with a target price of US$66.

Citi analyst Jim Suva, however, has a Hold on the stock with a target price of US$46. Mr. Suva remains skeptical in the near term, estimating earnings-per-share growth of just 7% this year, which is “hard to get excited over.”

Hopefully upcoming device launches such as the Niagara will quell any market uncertainty.

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RIM makes “land grab” with consumer market despite small margins

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RIM’s market is currently around 50% consumer and 50% enterprise. The shift has been a while coming and it has been helped by a series of aggressive ad campaigns, new software, and rolling out more consumer-friendly devices, such as the touch-screen Storm. The move has also proved successful due to RIM increasing its share of the smartphone market—up to 19.5 percent in the last three months of 2008, from 10.9 percent a year earlier.

Investors are weary due to the fact that these efforts to get the consumer market have taken a toll on RIM’s gross profit margins, which have shrunk to 40 percent, down from 50 percent in the last six months. It is also possible that these measures, in combination with other market factors, have helped knock RIM’s share price down a third from its July 2008 high of $147 per share.

Jim Balsillie is calling the strategy a “land grab” and that the company was looking for long-term gain with it. He said of their consumer push, “So we could have a sweeter margin for a couple of quarters and we might not torque the growth quite as much and then we will rue that for the next 20 years, that we gave up the key land for a little bit of interim gratification.”

In the end, investors are going to see RIM take not only a larger chunk of the consumer market, but also the enterprise market. Consumers are starting to see the BlackBerry as a status symbol that is a must-have mobile device. Enterprise simply can’t do without their push email and plethora of productivity apps with a simple and easy to use OS to boot. Expect these investors to say “sorry for doubting you Jim Dog” in the coming years.

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Goldman Sachs backs RIM stock and shares rise

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Shares of RIM rose after a Goldman Sachs analyst said she would buy the stock in advance of its fiscal fourth-quarter report, which is scheduled for April 2. Shares rose $1.89, or 4.6 percent, to $44.87 in afternoon trading.

In a note to clients, Goldman analyst Simona Jankowski kept her “Buy” rating and $57 price target for the stock, predicting RIM will meet fourth-quarter and first-quarter guidance – something she thinks will help its shares.

Although RIM has said that its fourth-quarter earnings will likely come in at the low end of its forecast range, which had called for 83 cents to 91 cents per share, the news will surely help shares regardless.

RIM is also predicting that revenue will be at or near the midpoint of its earlier projection, which was for $3.3 billion to $3.5 billion.

Goldman Sachs aren’t the only people backing RIM either. Analysts polled by Thomson Reuters are expecting a profit of 85 cents per share on $3.42 billion in revenue.

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