Following the third-quarter 2013 earnings announcement on
December 20, 2012 for
Research In Motion Ltd.
), there was a huge downward revision of EPS estimates.
Third Quarter Highlights
GAAP net income in the third quarter of fiscal 2013 was $14
million or 3 cents per share compared with $265 million or 51
cents per share in the year-ago quarter. The company incurred a
huge one-time income tax benefit of $226 million. Excluding this
item, quarterly adjusted loss per share of 22 cents was better
than the Zacks Consensus Estimate of a loss of 35 cents per
share. Total revenue in the quarter was $2,727 million, down by a
whopping 47.2% year over year but well ahead of the Zacks
Consensus Estimate of $2,647 million. Quarterly gross margin was
30.4% well above 27.2% in the prior-year quarter. Quarterly
operating loss was $230 million compared to an operating income
of $328 million in the year-ago quarter.
Agreements of Analysts
For the fourth quarter of fiscal 2014, in the last seven days,
out of the 29 estimates, 14 were revised downwards but at the
same time there were seven upward revisions of EPS estimates.
Likewise, for the first quarter of fiscal 2014, out of the 25
estimates, 10 have lowered their estimates while seven estimates
moved in the opposite direction.
Currently, the Zacks Consensus EPS Estimate for the fourth
quarter of fiscal 2013 is pegged at a loss of 29 cents,
reflecting an annualized decline of 136.38%. Similarly, for the
first quarter of fiscal 2014, the current Zacks Consensus EPS
Estimate of a loss of 16 cents indicates an year-over-year
increase of 56.54%.
We believe that stiff competition from
) iPhones and
) Android-based smartphones coupled with a backdated operating
system have caused downward revision of estimates. Moreover,
delay in the launch of BlackBerry 10-based smartphones coupled
with the lackluster performance of PlayBook tablets has resulted
in further decrease in estimates.
Magnitude of Estimate Revisions
During the last 7 days, the current Zacks Consensus Estimate
for the fourth quarter of fiscal 2013 was 2 cents above the loss
per share of 27 cents of the previous Zacks Consensus Estimate.
Similarly, for the first quarter of fiscal 2014, the current
Zacks Consensus Estimate was 3 cents above the loss per share of
13 cents of the previous Zacks Consensus Estimate.
Likewise, for fiscal 2013, the current Zacks Consensus
Estimate was 6 cents below the loss per share of $1.24 of the
earlier Zacks Consensus Estimate. However, for fiscal 2014, in
the last 7 days, the current Zacks Consensus Estimate was 4 cents
above the loss per share of 52 cents of the previous Zacks
Research In Motion produced an earnings surprise of 13 cents
or 37.14% in the last quarter with an average earnings surprise
of a negative 150.48% in the trailing four quarters. There are
downside potentials (essentially a proxy for future earning
surprises) of 3.45% and 12.5%, respectively, for the ongoing
quarter and the next quarter. However, for fiscal 2013, the Zacks
Consensus Estimate's downside potential is 0.00% while 2014
contains a downside risk of 8.93%.
We maintain our long-term Neutral recommendation for
Research In Motion. Currently, it has a Zacks #3 Rank, implying a
short-term Hold rating on the stock.
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30
years ago that earnings estimate revisions are the most
powerful force impacting stock prices. He turned this ground
breaking discovery into two of the most celebrating stock
rating systems in use today. The Zacks Rank for stock trading
in a 1 to 3 month time horizon and the Zacks Recommendation for
long-term investing (6+ months). These "Earnings Estimate
Scorecard" articles help analyze the important aspects of
estimate revisions for each stock after their quarterly
earnings announcements. Learn more about earnings estimates and
our proven stock ratings at:
APPLE INC (AAPL): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis
RESEARCH IN MOT (RIMM): Free Stock Analysis
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