RIM Isn't Going to Bounce Back
Research In Motion (NAS: RIMM) reports its latest quarterly results a week from today, and bulls should be nervous.
There's little hope of the smartphone pioneer orchestrating a turnaround in the near term. Analysts see the BlackBerry maker posting a beefy deficit of $0.47 a share on a brutal 40% plunge in revenue.
Don't assume that Wall Street's simply being overly pessimistic. If anything, analysts have been too generous in the past. RIM has come up short in three of the past four quarters, including posting a much larger loss than what the pros were targeting three months ago.
Earlier this year there was buzz building around RIM as a buyout candidate, but now it seems as if nobody wants to try to catch a falling knife. They see how badly things worked out for the buyer of Palm, and nobody wants to repeat the mistake of buying an operating system on the way out.
Just three months ago, analysts were banking on a profit of $0.45 a share out of RIM this fiscal year, growing to $0.58 a share in the new fiscal year that begins next March. Reality crushed the prognosticators. Now, all 45 of the major analysts following RIM see a loss this fiscal year. The consensus estimate also calls for another deficit next year.
It doesn't take a genius to figure out the problem. Apple's (NAS: AAPL) iPhone 5 is hitting the market tomorrow with plenty of hype, and it's not even the world's most popular platform. Google's (NAS: GOOG) Android operating system accounted for nearly two-thirds of all smartphones sold on the planet last quarter. In that time, RIM has seen its market share cut in half.
There's still money to be made with a shrinking slice of a growing pie, but RIM is shrinking too quickly. Apple and Google are too powerful, and now you have Microsoft (NAS: MSFT) throwing billions at Nokia (NYS: NOK) to see if there's room for a third relevant mobile platform.
Value investors may not see it that way. They see that RIM has been trading in the single digits since June. Isn't this the same company that at least one analyst thought Microsoft would buy out if it fell below $50?
Forget about the buyout promise from a few years ago. Set aside the forecasts of near-term profitability that died three months ago. RIM's in trouble, and the only thing left to decide is the magnitude of the ugliness that next Thursday afternoon's quarterly report will provide.
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The article RIM Isn't Going to Bounce Back originally appeared on Fool.com.The Motley Fool owns shares of Apple, Google, and Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Apple, Google, and Microsoft.Motley Fool newsletter serviceshave also recommended creating a bull call spread position in Apple and a synthetic covered call position in Microsoft. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributorRick Munarrizcalls them as he sees them. He does not own shares of any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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