No doubt about it: it's been a dreadful year for Research In Motion Ltd. , with a seemingly unending series of gaffes and disappointments for investors.
And Citigroup analyst Jim Suva is reminding us today that no matter how bad things seem to be - it may very well get worse.
Mr. Suva reaffirmed his "sell-high risk" rating on RIM and $15 (U.S.) price target. RIM's latest earnings will be released on Thursday and he's not expecting many surprises given the company already issued a profit warning at the start of this month.
The focus will likely turn to RIM's outlook for the fourth quarter, which ends in February, and for the fiscal year ahead.
Already the signs aren't promising. The company already hinted the current quarter will contain its share of disappointments, stating that it expects unit shipments to be below third-quarter levels. That would mark only the second time in a decade quarter-over-quarter unit sales declined in that three-month period.
"Bottom line, we believe RIM has no short-term fixes to improve product portfolio, brand perception, to reinvigorate share gains, revenue growth and profitability," Mr. Suva said in a research note.
He provided these 10 reasons why things may get worse for RIM:
1) RIM is missing the Christmas shopping season setting up risk of additional loss of consumer mindshare.
2) Potential for delays in its QNX product launch initially scheduled for early calendar year 2012, as problems with QNX tablet security & native email leads to QNX phone delays.
3) RIM cannot cancel its Playbook program as the QNX language is the future of the company, which developers & enterprises need to work with.
4) RIM is missing much of the Nokia share opportunity while Apple and Android are grabbing this share.
5) New iPhone 4S recently launched to pressure RIM's North America business as Verizon's CDMA iPhone 4 was not suited for traveling business users.
6) RIM is losing carrier support in shelf space, promotion, eagerness for product certification.
7) Highly profitable monthly carrier subscriber fees to go lower as North America for RIM continues to go lower & network outages cause carriers to push back on these fees.
8) RIM is going through a business realignment (restructuring) and will reduce employee count at a time when we believe the company should be hiring to get product out on time versus delays.
9) Earnings per share growth will decline year over year and RIM's sales growth will be less than half of the industry's smartphone growth.
10) BYOD (bring your own device) and corporate sandboxing are only beginning and could severely impact RIM's subscriber base as many large corporations reassess their carrier data subscription plans on a annual basis so this cold start to be become a material challenge for RIM in calendar year 2012.
Darcy Keith