Shares of Research in Motion (RIMM) are off $1.09, or almost 7%, at $15.09 in advance of tomorrow’s presentation in Manhattan of the long-awaited BB10 upgrade to the BlackBerry.
I’ll be on hand to blog the event live, and you can follow along with RIM’s live webcast, if you like, with the keynote starting at 10 am, Eastern time, which you will find at RIM’s news page tomorrow.
One of the nicest bits of commentary in recent days came from CIBC‘s Todd Coupland over the weekend. Though he has a Market Weight rating on the shares, he thinks even a modest success with BB10 could lift the outlook for the company.
And as evidence of lingering dedication to the platform, Coupland included in his report a pic snapped at the recent Detroit Auto Show, where, as he understands, all the Wall Streeters there to kick the tires were also crowding the BlackBerry chargers:
The Street, meanwhile, offered some skeptical notes this morning on RIM’s effort to revive the BlackBerry.
UBS’s Amitabh Passi and Phillip Huang this morning reiterated a Neutral rating on the shares and a $9.50 price target, writing that the “odds remain stacked against RIM”:
With a new tag line, �Re-designed. Re-engineered. Re-invented�, RIM is attempting a come back, but it appears late, at least in its current form [�] From a timing perspective, BB10 appears a couple of years too late. Further, for RIM to succeed, we believe it will need to energize and re-ignite the fire in its highly lucrative subscriber base in western markets (revenues down 50-65% y/y in F3Q13), where we believe both Apple (AAPL) (iOS) and Google (GOOG) (Android) have amassed significant momentum and subscriber lock-in (think iPhone, iPad, iTunes, iMac, iCloud). RIM will also need to contend with device vendors such as Samsung with tremendous scale, marketing muscle, and distribution prowess. In our opinion, Apple, Google, and Samsung all have a much broader and complete vision focused on multiple screens and content (e.g. Google Search, Google+, Google drive, maps, etc). While emerging markets are likely to remain relevant for RIM, we fear that BB10 price points will be beyond reach for many subscribers in these markets. As evidenced in FY12, RIM�s business model cannot be sustained simply on its success in emerging markets. As we wrote over a year ago, we still believe RIM�s best chance at success longer term would be to exit the hardware business and become a software and device independent mobile device management (MDM) company. Here again, time is against RIM but given its installed enterprise base and reputation for security, we believe it has a reasonable chance of success [�] With RIM�s stock having tripled off its lows in September 2012, and now trading at just around book value (tangible book just below $12/share) and with a market cap of $8.5 billion, we see limited upside to shares near-term.
Wedge Partners‘s Brian Blair is similarly skeptical, arguing that the Street “has erroneously baked in a very positive consumer response” and that tomorrow is “likely to be a sell-the-news event”:
RIM has rallied on the hopes that BB10 and the accompanying devices (6 this year, according to RIM execs) can stave off the company�s bleeding, and boost unit growth and lift ASPs and margins in the quarters to come. The problem is that the BB10 subscriber base remains at zero, with not a single unit sold. While we admit that many of the pictures and videos of the Blackberry Z10 device show a solid effort to meet the functionality of iOS and Android, we have yet to see a key BB10 feature that we feel will pull users away from those operating systems. Some bullish estimates are calling for 18 � 20 million units of BB10 devices in 2013; our expectation is for half of that. We think 8-9 million units globally is likely obtainable.
Among the things Blair is looking to hear about at the event tomorrow are whether,
RIM [is] advertising it or are carriers supporting it with heavy campaigns? [�] When it arrives in stores, are salespeople pushing it? Numerous carriers have said they will carry BB10, but sales will depend largely on how it is sold [�] It will likely launch at $199, but it may need to be less to entice users away from Android/iOS/Windows devices [�] What does RIM have to do to make it compelling to consumers/enterprise and what will that cost? A gross margin hit may happen out of the gate as RIM ramps the new devices, even if the ASP is initially higher than BB7 devices [�] Is there any indication that consumers are waiting for this device? This is a tough thing to gauge, but the first two months of sales will be telling [�] Better Mousetrap?: Does BB10 have a killer app or feature? Does the �peek� feature or multitasking make it a better Smartphone than what is on the market? This may be the most important question for the product.
No comments:
Post a Comment