Research In Motion Ltd.
) is scheduled to release its first quarter 2013 results on
Thursday, June 28, after the closing bell. The current Zacks
Consensus Estimate for the to-be-reported quarter is a loss of 2
cents, representing year-over-year decline of 101.68%.
Research In Motion has outperformed the Zacks Consensus Estimate
in only two out of the last four quarters with an average earnings
surprise of a negative 1.62%.
Fourth Quarter Recap
On March 30, 2012, Research In Motion reported fourth quarter
2012 financial results. Adjusted EPS in the reported quarter was 80
cents, a penny shy of the Zacks Consensus Estimate. GAAP net loss
in the fourth quarter of fiscal 2012 was $125 million or 24 cents
per share compared with a net income of $934 million or $1.78 per
share in the year-ago quarter.
Total revenue in the fourth quarter of 2012 was $4.2 billion,
down a massive 24.6% year over year and also well below the Zacks
Consensus Estimate of $4.5 billion.
Research In Motion sold 11.1 million BlackBerry mobile phones,
down 21% sequentially. The company also sold over 500,000
BlackBerry Playbook tablets, up 70% sequentially. However, Playbook
tablets were sold at a considerable discount of $200 compared to
its original price of $500.
Agreement of Analysts
The estimate revisions over the last 30 days indicate that
analysts are more or less in agreement regarding the company's
Specifically, 30 out of the 34 analysts providing estimates for
the first quarter of 2013 lowered estimates, while none moved in
the opposite direction. Likewise, for the second quarter of fiscal
2013, out of the 33 analysts providing estimates, 28 analysts
slashed estimates while only one analyst raising the estimate.
Similarly, for fiscal 2013, 31 out of the 37 analysts lowered
estimates while only one analyst raised the estimate. For fiscal
2014, out of the 28 analysts, 19 analysts lowered estimates with
only two analysts moving in the opposite direction.
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
Despite the huge number of analysts lowering estimates for the
first and the second quarters of 2013, the Zacks Consensus
Estimates were unchanged at a loss of 2 cents and 4 cents,
respectively. This seems to indicate that the estimate revisions
were not material and more in the nature of fine-tuning.
Likewise, for fiscal 2013, the current Zacks Consensus Estimate
was just a penny below the previous estimate of 43 cents. However,
for fiscal 2014, the current Zacks Consensus Estimate was 3 cents
above the earlier estimate of 61 cents.
In the previous quarter, Research In Motion reported EPS of 80
cents, which fell short of the Zacks Consensus Estimate by a penny.
The current Zacks Consensus Estimates for the ongoing and upcoming
quarters imply a 300.00% and 150.00% downside risk (essentially a
proxy for future earnings surprises). Likewise, the estimate for
fiscal 2013 and 2014 reflect downside potentials of 59.52% and
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.
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