RIMM wtf happened?

Kassz007 · Jun 18, 2009

Quote from Kicking:

RIMM and Apple topped out on long term charts. Unless there is another 2003-2004 massive market rally , they are finished. Even then they should correct first and take out their recent lows. (btw what does it say about Nasdaq ? )
Besides, I stopped consuming and I am intent on converting the masses to my anti consumption lifestyle.

Not sure I am buying your analysis...
This actually was a good quarter for RIMM but as I said, expectations were just way too high. They needed to blow the numbers out of the water to see a pop. Let's break some of it down:

1. Margins increased over last quarter from 40% to 43.6%.
Very bullish given the fact that competition is increasing which usually causes margins to be squeezed due to pricing pressures.

2. Overhead was up across the board over last quarter.
Not great news. Increase in SG&A but also due to more R&D.

3. Earnings beat expectations by $0.04
Speaks for itself.

4. Revenue missed by ~$10 million 
Not concerned, still up 53% from last year.

5. Q2 Guidance - $0.94-$1.03 on $3.45 billion - $3.7 billion vs. $0.97 on $3.61 billion
This is the reason for the sell off IMO. Not terrible but it is a somewhat wide range that includes the possibility of missing expectations. Guidance also doesn't show big improvement vs. this quarter.

I might consider snatching some of this up if it continues to drop lower.
Anyone else care to give a take on this?

stock777 · Jun 18, 2009

watching RIMM trade in the ah is a goof.

amateurs got run over big time

i said this is going green two points ago

still time

the boxes own this mf.

hand traders might as well just give their money away.

stock777 · Jun 18, 2009

whats it like to sell at 71 and then have the stock ramp back to 76?

ByLoSellHi · Jun 18, 2009

RIMM is done for. I know, I know, no one can no this for sure. It's implied to be a speculative position.

Look at it this way: Viewed in the context of their incredible winning streak, where they had blowout earnings after blowout earnings after blowout earnings, this quarter was decisively milquetoast.

And the space they're in is sooo much more crowded.

Kassz007 · Jun 19, 2009

Quote from ByLoSellHi:

RIMM is done for. I know, I know, no one can no this for sure. It's implied to be a speculative position.

Look at it this way: Viewed in the context of their incredible winning streak, where they had blowout earnings after blowout earnings after blowout earnings, this quarter was decisively milquetoast.

And the space they're in is sooo much more crowded.

They've had quarters like this before (mediocre). I've been following this stock closely for two years now. Last spring they reported a quarter that missed expectations and caused a drop from ~$140 to ~$100 and everyone wrote them off then as well. It's true, the space is more crowded, but the smartphone industry has a LONG way to grow yet, and RIMM is going to be a big part of that. I'm not a buyer until the dust settles on this quarterly report, but they are far from done...

Susannah · Jun 19, 2009

It will be interesting when the iPhone starts getting on other networks besides AT&T. Apple's already talked to Verizon, that will seriously eat into RIMM's business.

S2007S · Jun 19, 2009

Quote from Susannah:

It will be interesting when the iPhone starts getting on other networks besides AT&T. Apple's already talked to Verizon, that will seriously eat into RIMM's business.

It will be on other networks, VZ and Tmobile know what kind of numbers the iphone brings with it and will certainly be adding it to their line in due time, I would say that by 2012 nearly every major company will carry the Iphone, this will certainly take plenty of market share away from RIMM.

traderyin · Jun 19, 2009

I think pricing power is becoming more of a problem (squeezing margins) than competition from iPhone. iPhone can not take market shares away in the corporate sector while RIMM is marketing itself to regular consumers - which is more of iPhone's market than the corporate. So I think they are pretty even out as far as poking at each other's markets.

The problem lies in the margin. When iPhone 3G is now $99 with contract- down substantially from the time the first iPhone is launch. This is going to eat into the smartphones margins.

It's like Garmin, when you are making 40% margin on a GPS. It only takes some time before someone notices it and starts making GPS with lower price (ei: I don't need 40% margin, I can live with 10-20%).

On the positive note, RIMM has yet to open the market up in China. And they have a good amount of potential there - same with other growing emerging markets.

Kicking · Jun 19, 2009

Quote from Kassz007:

Not sure I am buying your analysis...
This actually was a good quarter for RIMM but as I said, expectations were just way too high. They needed to blow the numbers out of the water to see a pop. Let's break some of it down:

1. Margins increased over last quarter from 40% to 43.6%.
Very bullish given the fact that competition is increasing which usually causes margins to be squeezed due to pricing pressures.

2. Overhead was up across the board over last quarter.
Not great news. Increase in SG&A but also due to more R&D.

3. Earnings beat expectations by $0.04
Speaks for itself.

4. Revenue missed by ~$10 million 
Not concerned, still up 53% from last year.

5. Q2 Guidance - $0.94-$1.03 on $3.45 billion - $3.7 billion vs. $0.97 on $3.61 billion
This is the reason for the sell off IMO. Not terrible but it is a somewhat wide range that includes the possibility of missing expectations. Guidance also doesn't show big improvement vs. this quarter.

I might consider snatching some of this up if it continues to drop lower.
Anyone else care to give a take on this?

All this is pretty much meaningless, the only way I see RIMM and al. wouldn't collapse is fed liquidity but this time it's not working as well as intended. But anyway former leaders don't lead, I think RIMM is past its prime.

Kassz007 · Jun 19, 2009

Quote from traderyin:

I think pricing power is becoming more of a problem (squeezing margins) than competition from iPhone. iPhone can not take market shares away in the corporate sector while RIMM is marketing itself to regular consumers - which is more of iPhone's market than the corporate. So I think they are pretty even out as far as poking at each other's markets.

The problem lies in the margin. When iPhone 3G is now $99 with contract- down substantially from the time the first iPhone is launch. This is going to eat into the smartphones margins.

It's like Garmin, when you are making 40% margin on a GPS. It only takes some time before someone notices it and starts making GPS with lower price (ei: I don't need 40% margin, I can live with 10-20%).

On the positive note, RIMM has yet to open the market up in China. And they have a good amount of potential there - same with other growing emerging markets.

Squeezing margins is typically a problem with increasing competition but RIMM was showing increased margins as well as market share. I think an important thing to note is the fact that the smartphone industry as a whole has a lot of room to grow, which means it's possible for the Blackberry, iPhone and Pre to all succeed. Watching what happens in India and China will play a large part in this story. I think RIMM has the upper hand in those countries as of right now though because of their huge security advantage over the iPhone (not sure about Pre). RIMM's email and business applications are well known for their security advantage which could be quite helpful in these emerging markets.