Canadian smartphone maker Research in Motion (
) expects strong sales for the fourth quarter of calendar 2010,
according to the company's most recent earnings report. We agree
that the holiday season should help RIM sell more BlackBerry
phones, as will the company's growing presence in international
RIM competes mainly with Apple (
), Motorola (
) and Nokia (
) in the global smartphone market. Based on RIM's results for the
second quarter of its 2011 fiscal year,
we have raised the Trefis stock price estimate for
RIM from $70 to $72.
Our analysis follows below.
Rapid sales, new phones
RIM sold around 12.1 million BlackBerry phones in its most
recent quarter and expects to sell about 14.1 million next quarter
. We now expect RIM's share of the global mobile phone market to
reach 3.7% this year, up from 2.7% in 2009. We expect slower
share growth thereafter, reaching 7.8% by the end of the Trefis
RIM's stock is highly sensitive to mobile phone market share
fluctuations. For example, if RIM's market share were to reach only
6% by 2016, there could be a downside of more than 20% to the
$72 Trefis price estimate for RIM's stock.
RIM's market price has ranged between $40 and $50 in the last few
weeks, which suggests that investors expect RIM to gain share
slowly in an increasingly competitive smartphone market. You can
drag the trend-line in the chart above to create your own mobile
phone share estimate for RIM and see how it impacts the company's
estimated share value.
RIM also launched two new handsets during the last quarter: the
BlackBerry Torch and the BlackBerry Curve 3G. Meanwhile the average
BlackBerry selling price rose from $299 in the first quarter of
fiscal 2011 to around $302 in the second quarter. RIM expects the
average price to reach $312 next quarter.
We expect the average BlackBerry selling price to decline
steadily in coming years, falling below $220 by the end of the
Trefis forecast period. In the next chart you can create your own
BlackBerry price forecast and see how it impacts RIM's stock.
RIM anticipates brisk sales during the November-January holiday
season. The company also stands to benefit from an increasingly
dense web of relationships with carriers, distribution partners and
retailers in international markets, which now generate 52% of RIM's
BlackBerry smartphones are now
available through around 565 carriers and
distribution partners in approximately 175 countries
, according to management. RIM plans to push its BlackBerry
Torch in international markets next quarter, offering the phone
through some 75 carriers . In another article, we argued that
the Torch's slow U.S. start could hurt RIM's stock. Although
official Torch sales figures are not available, management
indicated that sales rose during the first week of September.
You can see the complete $72 Trefis Price estimate
for RIM's stock here.
 As disclosed in
RIM's FY Q2 2011 earnings transcript