Friday, June 17, 2011


The last of the sell-side bulls on Research In Motion are starting to throw in the towel.
Late yesterday, the BlackBerry phone maker posted slightly disappointing results for the fiscal first quarter ended in May, along with extremely weak guidance for the August quarter, and a sharply reduced forecast for the February 2012 fiscal year. The bottom line here is that the company is hemorrhaging market share to Apple andAndroid, and there doesn’t seem to be a whole lot that the company can to reverse the trend. And the company’s PlayBook isn’t making much of a dent in the Apple iPad’s commanding control of the tablet market.
At least five analysts cut their ratings on the stock this morning, which is getting pounded in early Friday trading.
  • MKM Partners analyst Tero Kuittinen cut his rating on the stock to Neutral from Buy, with a new target of $32, down from $62. “We believe Nokia’s Symbian collapse still gives RIMM a shot at delivering a powerful rebound in the November quarter, but there is clearly a risk that carriers will lose their patience with RIMM and increase their support for various Android QWERTY smartphone alternatives,” he writes in a research note.
  • J.P. Morgan analyst Rod Hall cut his rating to Neutral from Overweight, with a new target of $30, down from $40.50. “We see the next few quarters as a potentially tough period for RIMM characterized by further product delays,” he writes. “In our opinion delays could easily affect new QNX based smartphones we had expected in early 2012. RIMM’s cautious EPS guidance keeps us from moving our rating to Underweight though we do believe there is more risk that EPS ends up at the low end of the new EPS range than the high end.”
  • Caris & Co. analyst Robert Cihra cut his rating on the stock to Average from Above Average, with a new target of $40, down from $70. “Following a full-blown void of new handsets year-to-date, after having already misread customer demands and competitive landscape, it appears RIMM has now sunk into eroding mismanagement, having delayed even just its evolutionary Bold 9900 refresh multiple times.”
  • Scotia Capital analyst Gus Papageorgiou cut his rating to Sector Perform from Outperform. “Strength in international markets, strong if not reduced profitability, a slew of new products, and the strong launch of the PlayBook indicate RIM maintains some strengths. But, in our view, the company needs to execute,” he writes.
  • Citigroup analyst Jim Suva cut his rating on the stock to Sell from Hold, with a new target of $25, down from $45. Citi also had cautious comments on some of the contract manufacturers that produce products for RIMM, downgrading Celestica to Sell from Hold, with a new target of $8, down from $12; he also trimmed targets on both Jabil and Flextronics. He notes that RIMM is a material customer for Celestica, at about 21% of sales, while the company accounts for 15% of sales at Jabil and more than 10% for Flex.
I would note that a host of other analysts chopped target prices for the stock; and everyone reduced estimates following the disappointing guidance.
RIMM this morning is down $6.52, or 18.5%, to $28.81.
Update: Standard & Poor’s analyst James Moorman cut his rating on the stock to Hold from Buy, with a new target of $29, down from $65.

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