Monday, September 29, 2008

Research in Motion (RIMM) analysis.

Before last quarter results company shares slide already 35% after disappointing Q1. Weak forecast for current period triggered another 27% plunge. Earnings per share (86 cents) met expectations with revenue slightly above street consensus.

Main reason why stocks got under selling pressure were lower forecast for current quarter. And also gross margin that has lowered to 47% from 51.3%. You remember the same problem came for Apple (AAPL). Gross margin was 34.8%, down from 34.8%.

Last significant price drop and still robust earnings growth (72%) make attractive valuation based on PEG ratio. RIM PEG = 0.98 vs AAPL PEG = 4.13.

In first half of 2008 total smart-phones sales are up 22% compared to 2007. All markets have increased except of Japan where the sales drop 4.8%. RIM posted the biggest market share increase which currently accounts 17.4%. Nokia is still leader with 47.5%. You can see sales growth and market share after first quarter in my previous post. Smart-phone market recently joined Google. Google's Android which like Apple's IPhone can't be considered as a real the competition as RIM business devices are primarily targeted to corporate clients.

Many new models to be launched till end of the year. Much-anticipated Bold launch in US could come later this. Bold is already on sale in Europe and in Canada. First flip-phone called BlackBerry Pearl Flip. And non-officially touch-screen device. Also the Storm and a mini-Bold called the Javelin are all on the way.


1 Response to "Research in Motion (RIMM) analysis."

Brian said... September 30, 2008 at 7:19 PM

We were telling traders that the analysis were wrong on RIMM when they were telling everyone to buy at $120.