RIM investors being positive about RIM reporting results on Thursday
While Wall Street analysts are expecting gloomy figures when Research In Motion reports its results on Thursday, investors are having a more positive outlook.
At this stage, profit and revenue won’t matter much for RIM.
The company will likely report a third straight quarterly loss, reflecting declining monthly service fees, ebbing device sales and other problems.
What investors want to see are indications of momentum as the BB10 launch on Jan 30 approaches.
The new line is probably the company’s last hope of reclaiming market share lost to Apple’s iPhone and devices powered by Google’s Android operating system.
“The biggest catalyst for the stock by far is a successful BlackBerry 10 launch,” said Morningstar analyst Brian Colello. “The entire investment thesis hinges on BlackBerry 10 … so that is the key focus right now.”
With focus on the launch, cash on hand will indicate whether the Waterloo, Ontario-based company has the funds it needs to market its new line effectively.
“I want to see the cash balances retained so that they have lots of availability to support the launch of BB10 in January and February,” said National Bank analyst Kris Thompson.
“They are going to need money to build their inventory and to promote the new product on a global launch. It’s going to cost hundreds of millions of dollars, so it is pretty important that they maintain that cash balance.”
Despite a massive loss in the last quarter, RIM added $100 million to reserves as it slashed costs and cashed in on money it was owed, bringing the total to $2.3 billion. As a second point of interest, investors will size up any charges RIM books in its fiscal third quarter for layoffs and other aspects of its painful restructuring.
“If it is $100 million or $200 million to finish off the restructuring, I think people probably would be OK with that,” said CIBC World Markets analyst Todd Coupland, who has a “sector outperformer” rating on RIM’s stock. “Anything beyond that probably is going to be cause for some concern.”
Metrics such as service revenue, shipments and subscriber numbers will likely merit attention as well. The company bucked analysts’ expectations last quarter and expanded its subscriber base to 80 million as gains in emerging markets partly offset defections in North America.
“The biggest number is the number of BlackBerry subscribers that they are able to still hold on to during the transition,” said Morningstar’s Colello. “Investors would like to see that customers are not heading for the exits right before this transition.”
