Subscriber Numbers To Dominate Research In Motion Earnings (RIMM, AAPL, PALM)

April 2, 2008 by Douglas A. McIntyre

After today’s close we’ll get to see earnings out of Research In Motion Ltd. (NASDAQ: RIMM). The estimates have been ratcheted up a bit, but only ever so slightly since last week. The estimates from First Call are $0.70 EPS on $1.86 billion in revenues.  Next quarter estimates are $0.76 EPS on $2.02 Billion in revenues. Estimates for fiscal Feb-2009 are $3.49 EPS on $9.26 Billion in revenues.

R-I-M raised its guidance late in February, despite concerns seen elsewhere in the sector, with a new target of roughly 14 million subscribers for the quarter end.  When R-I-M gave its update, it put revenue in the $1.80 to $1.87 Billion range and said it saw $0.66 to $0.70 per share diluted; First Call had estimates at the time as $1.85 Billion revenues and $0.69 EPS, both are under today’s estimates.  Shares were at $104.55 after the pop from the news of its guidance hike.  Shares closed Friday at $115.34, and mid-day today shares sit north of $118.00. 

Last week the analyst target was north of $136.00 and today that stands above $137.00 after some target raises over the last three days.  This may be a bit off depending on the moment, but as of a static pricing right now, it appears that options traders are braced for a move of up to about $9.50 in either direction.  R-I-M still sits well above some of its key longer-term moving averages: 200-day moving average today is $95.22 and the 50-day moving average today is $100.48. 

Palm Inc. (NASDAQ: PALM) is now hardly a footnote despite having sold 1 million of its $99 Centro smartphones.  The thought had been that Apple Inc. (NASDAQ: AAPL) was going to release its 3G version of the iPhone later in the year.  Now some data points to May, although that still varies.  There is a quasi-consensus belief that R-I-M will have another dominant two quarters of being the smart phone leader on the enterprise level; and whether Apple’s 3G iPhone will ever truly challenge the enterprise spending is another issue entirely.

Regardless of R-I-M’s news, it frequently sees large stock price moves either way on post-earnings news.

Jon C. Ogg
March 30, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.