Following last night's earnings release, Deutsche Bank notes that after negatively pre-announcing, RIMM reported Q3 results with revs of $2.8 bln, in line with their estimate and consensus. They note pro forma EPS of $0.83. They say despite a large marketing campaign and channel fill from multiple new products, mgmt attributed their Q3 shortfall to forex and weakening consumer demand, especially in the US market. They note that after several years of premium margins, RIMM is now feeling the effects of its increased reliance on hardware sales for growth. The co appears to have taxed its margins and their ability to launch new products with four new devices this year. The firm does not think this pressure will let up and see further downside to their revenue and earnings in coming quarters. Firm cuts their ests and says continued margin weakness and macro headwinds merit a Sell rating.
Lazard says RIMM's results reflected the continued strength in the smart phone category as one of the leading segments in the phone industry next year. Firm notes that RIMM believes the Storm mix will rise next quarter as the co has very good visibility on the demand for this product next quarter that is booked at Verizon and Vodafone. They say this data point is positive for SYNA, which designs the touch screen module for the Storm. Firm notes that RIMM mgmt was also excited about the traction that the BOLD is getting at AT&T. The firm sees this as positive for MRVL, which sells into the RIMM product line in general and Bold specifically.
Collins Stewart notes that RIMM indicated that total handset shipments in the quarter of 6.7 mln units were driven by strong demand for its new touchscreen Storm phone. Co indicated that launches at VZ/Vodaphone (VOD) have gone extremely well, as the co has not been able to keep up with demand in North America. Additionally, they note RIMM indicated that demand for Storm remains very strong heading into F4Q09 (Feb) guiding for total handset shipments 7.5-8 mln (+16% q/q) units. The firm believes RIMM's strong guidance and outlook for Storm handsets have largely already been reflected in SYNA's 4Q08 est... RIMM was also downgraded at Cowen following earnings.
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