Quote from aresky: 07-09-08 09:12 PM
Research In Motion (RIMM): Still Expensive For Company Headed Into War
Jul 8, 08
RIMM has slipped from $145 to $115 after only a slight earnings miss last month. This is no mystery: The company is at war with Apple (AAPL) to protect its business franchise and capture the consumer market, and increased marketing spending on the latter front is hurting margins. (And, of course, the broader market is collapsing).
Even after the miss, RIM still trades at more than 40X trailing earnings, so there's still a momentum premium in there. It has sold off considerably, so Faisal is probably right that it's due for a bounce. Eventually, however, even if the business continues to thrive, RIM will trade at 25X-30X. Don't believe us? See the demise of every momentum stock in history.
RIM is an excellent company, and ramping spending is the right move. What's good for companies, however, isn't always good for stocks, and in this case RIM can't have it both ways.
The first miss for a momentum stock like this usually isn't the last, and as RIM continues its push into the more price sensitive consumer market, the stock's multiple will likely continue to compress.
http://www.clusterstock.com/2008/7/...m-still-expensive-for-company-headed-into-war
Sept. 25 (Bloomberg) -- Research In Motion Ltd. missed analysts' estimates with its second-quarter profit and third- quarter forecast after boosting marketing to introduce phones and ward off Apple Inc.'s iPhone. The shares fell 14 percent.
Third-quarter profit will be 89 cents to 97 cents a share on sales of as much as $3.1 billion, Research In Motion said today in a statement. Analysts had predicted 99 cents in profit on average and revenue of $2.96 billion, according to a Bloomberg survey of analysts.
Research In Motion is rolling out four new phones as it faces new competition from models such as Apple's updated iPhone 3G. Sales and marketing expenses almost doubled to $379.6 million. The company had to delay the U.S. release of the BlackBerry Bold, a faster version of the BlackBerry e-mail phone, until October, which also may have cut into purchases.
``The cost of selling and launching all these platforms is much higher than what people thought,'' Pablo Perez-Fernandez, an analyst with Global Crown Capital in San Francisco, said in an interview. He recommends buying the shares, which he doesn't own.
Second-quarter net income rose 72 percent to $495.5 million, or 86 cents a share, from $287.7 million, or 50 cents, a year earlier, the company said. Analysts predicted a profit of 87 cents on average, according to the Bloomberg survey. Revenue climbed 88 percent to $2.58 billion, compared with the average projection of $2.59 billion from analysts.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aD_CaU3dfPY8&refer=home
