Barclays (NYSE:BCS) analyst Jeff Kvaal titled his RIM comments “Grim and Getting Grimmer.” He based his $12 share-price target and neutral rating on the expectation that RIM’s earnings won’t improve until the latter part of this year, at the earliest, when the BlackBerry 10 operating system is scheduled for rollout. That likely means the company will have to bide its time with outdated BlackBerry 7 products and the languishing PlayBook tablets.
A 10-point research note from Citigroup (NYSE:C) analyst Jim Suva, who also set a $12 target but with a sell rating, took further issue with RIM’s scheduling. The BlackBerry 10 launch, he notes, will miss the lucrative back-to-school sales period near the end of summer. It’s also unlikely that the PlayBook tablets will sell well during that period, given their poor sales performance during the strong pre-holiday season. Suva points out that RIM can’t cut its losses with the PlayBook program because the underlying QNX-based operating system also forms the foundation of BlackBerry 10.
If RIM doesn’t rebound this year, its eulogy may read “death by disinterest.” Cowen Group analyst Matthew Hoffman noted that RIM’s “dominance of enterprise wireless email has ended.”
PlayBooks initially shipped without a native enterprise email option, forcing interested users to pay for costly upgrades. And BlackBerry is no longer considered the most secure mobile option around; the U.S. government is working on a version of Google’s (NASDAQ:GOOG) Android operating system that’s secure enough for classified information.
RIM is betting heavily that the BlackBerry 10 operating system will prove successful enough to turn its fortunes around. And the company has been pushing to attract developers to the BlackBerry World app market, though a recent survey showed the BlackBerry platform ranking last in developer interest.
The company will try again in May, when it plans to present up to 2,000 free BlackBerry 10 loaded devices to developers attending the BlackBerry Jam event in Orlando, Fla.
Despite the negative press, RIM closed Monday at $14.04 and was up approximately 0.30% early Tuesday. That’s well below the 52-week high of $57.85 and shares will likely dip again following Thursday’s announcement. Zacks is predicting EPS of 0.82 cents, barely within revised guidance of 80 to 95 cents that had been knocked down from $1.15. Zacks does note that RIM has outperformed its estimates for the past three quarters.