“There are downgrades, and there are downgrades, but I have never seen the kind of downgrade parade marching through Wall Street this morning related to Research in Motion and its stock,” Jim Goldman reports for CNBC.
“The company’s second quarter earnings were disappointing, but RIM’s guidance was downright depressing. Margins will be squeezed, new subscriptions aren’t measuring up, and the sales and marketing expenses appear to be dramatically out of whack as this company tries to sell the variety of new BlackBerrys in its product pipeline,” Goldman reports.
“RIM spent that surprisingly huge $380 million to market all this stuff. And Wall Street is none too pleased. These downgrades this morning are so steep, so strong, so fast that they carry a negative G-force,” Goldman reports. “Cannacord Adams took its target from $185 to $72.50. RBC went from $165 to $90. Credit Suisse went from $100 to $80. These are brutal. RIM shares are in meltdown.”
“How did the Street, indeed so many of us, get this one wrong?” Goldman asks.
MacDailyNews Take: Not reading MacDailyNews frequently enough? Which part of “bloodbath” did you guys not understand?
Goldman continues, “The trouble for analysts and investors: no one knows how RIM will price new products. And when those prices come in far lower than expected, they contribute to earnings misses, kill margins and slash average selling prices. That’s a big problem for companies selling a variety of handsets across a number of smart phone sub-sectors. This indeed could be a harbinger of similar problems for Nokia.”
Goldman reports. “But not Apple. iPhone pricing is set. It doesn’t change until Steve Jobs announces a price change. With iPhone pricing, you know what to expect… If the market is there, and Apple meets or beats iPhone sales projections, today’s sympathy slide with RIM shares could mark a significant opportunity. Again.”
Full article – recommended – here.
[Thanks to MacDailyNews Reader “JES42” for the heads up.]
“It’s kind of one more entrant into an already very busy space with lots of choice for consumers,” RIM Co-CEO Jim Balsillie said of Apple’s iPhone on February 12, 2007. “But in terms of a sort of a sea-change for BlackBerry, I would think that’s overstating it.”
Research in Motion (RIMM) is currently down $23.91, or 24.51%, to $73.62 on heavy volume of 32,537,859 shares.
“what you guys fail to see is that unfortunately apple is next. “
It’s not impossible Apple could eventually get hit, but they’ve proven themselves to be very successful beyond their peers in economically challenging positions. If Apple gets hit it will likely be after everyone else gets hit first, and Apple is sitting on over 20 billion in cash, which they can use to weather any economic storm, possibly buy up attractive companies on the dime, and charge ahead with even better products, and more profits ahead of their peers.
As long as the 20 billion in cash is stuffed in the mattress they’re sitting on, they should be OK.
@ twilightmoon
2 x cash(20 billion)= 40 billion
40billion market cap is a 60% drop from current prices. even at 3 times cash the stock would be 80 dollars. Stocks go from new highs to new lows in a recession. aapls low is so much closer than the high and will act like a magnet. A fresh 52 week low will usually be the precursor to a 15-20% downside move. gl
hmm….
AAPL 110- 18.04