Getting Ready To Take Profits, Thanks to Toasted RIMM





Jun 17 2011
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I‘ve said this before and I’m going to say this again – BlackBerry is toast and its latest earnings announced just after the stock market closed proves this. As expected Research In Motion Limited’s (Nasdaq: RIMM, stock) reported an awful set of forecast during the conference call. The fact that RIM still managed to give a lower guidance below Wall Street’s already bad and low expectation only goes to show RIM is no better than Nokia in the field of smartphone market.

As a result, RIM shares plunged almost 15% in after-hours trading to around $30 a share. Guidance came in below Wall Street’s estimates for both the current quarter ending in August, as well as the fiscal year ending next February. This simply means RIM will miss most of the back-to-school season with the launch of its smartphones built on the new BlackBerry 7 operating system. Summary of RIM’s latest earnings for the quarter ended May 28, 2011:

RIMM Extended Hour Trading 17June2011

  • Revenue: $4.9 billion (up 16%) vs expectation of $5.15 billion
  • Earnings per share: $1.33 vs expectation of $1.32
  • Smartphone shipment: 13.2 million vs analysts’ 13.3 million
  • Playbook tablet shipment: 500,000 units vs analysts’ 436,000 units
  • Fiscal year ending Feb 2012 earnings: $5.25 – $6 vs consensus of $6.31 (RIM had maintained a full year EPS forecast of $7.50 prior to earnings)
  • Second quarter ending Aug 2011 earnings: $75 cents – $1.05 vs analysts’ $1.40
  • Second quarter ending Aug 2011 revenue: $4.2 billion – $4.8 billion vs analysts’ $5.8 billion

 

RIMM BlackBerry Profit

Click to Enlarge: RIMM June 45 Put Option

 

Obviously the company is under heavy pressure from popular Apple iPhone smartphone and Google Android operating system. RIM admited Android phones are causing problems for RIM in the lower end of the market where there has been “explosive growth” in demand. The Canadian company also announced plans to cut an unspecified number of jobs as part of a “cost optimization program.”

Thanks to the terrible earnings and guidance, my profit of more than 200% is almost guaranteed. I’ll close my position after Friday’s opening bell as this week is the expiration week, though I think RIMM shares would fell further for the weeks to come.

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