From left: Blackberry 9850, Bold, Torch. Fred Lum/The Globe and MailFred Lum/The Globe and Mail
Research In Motion will be the centre of attention in the mobile world this week, as the company posts its latest earnings results and tries to show that it is more success story than takeover target.
RIM announces its fiscal second-quarter results after market close on Thursday. Even though the company's stock has lost nearly half its value so far this year, RIM shares have experienced a mini-resurgence in recent weeks, in large part because of the new line of BlackBerrys released last month. Some investors have also looked more favourably on RIM shares following Google's acquisition of Motorola Mobility – an acquisition that once again fuelled speculation that RIM may be the next big takeover target.
The company's newly released smart phones, including a slimmer, more powerful version of the BlackBerry Bold, have received generally positive reviews. UBS Investment Research analyst Phillip Huang said recent store checks "point to a decent start" in sales for the new devices.
Last week, National Bank Financial raised its price target for RIM's U.S.-listed stock by 40 per cent, largely on the strength of the new product launches.
But the coming months may be challenging, as RIM enters the holiday shopping season competing against a slew of smart phones powered by Google's Android operating system, in addition to a brand new version of Apple's iPhone.
"RIM is being progressively effaced from the North American handset market, with market shares going from a peak of over 50 per cent to an estimated 13 per cent in the second calendar quarter of 2011," Bernstein Research analyst Pierre Ferragu said in a recent research report.
But even Mr. Ferragu, who has long been pessimistic about RIM's long-term chances of resurgence in the smart phone market, noted that the stock could be set for a short-term boost, in part because of growing enthusiasm about the company's anticipated line of mobile devices powered by the QNX operating system. In addition, Mr. Ferragu expects the refreshing of RIM's current line of BlackBerrys to help sustain the company's share price.
RIM is coming off some moderately good news in recent weeks.
In addition to the headline profit and revenue numbers, investors will be looking closely on Thursday at several key metrics in RIM's earnings report. Chief among those numbers are the average sales prices and gross margins of RIM's smart phones – in other words, whether RIM is selling high-end, high-priced devices or lower-end handsets, and how much money it is making off those devices.
Investors will also be looking for any update as to when RIM plans to unveil its new, QNX-powered units. The company has consistently pointed to early 2012 as a launch date, and any negative revision to that timeline will likely hurt its share price.