We reaffirm our long-term Neutral recommendation on
Research In Motion Ltd.*
), the BlackBerry smartphone manufacturer. The company reported
disappointing first-quarter fiscal 2014 financial results, which
were way below the Zacks Consensus Estimate. Research In Motion
currently has a Zacks Rank #3 (Hold).
(*Research In Motion announced that effective Jan 30, 2013,
the company would operate around the world under the name
BlackBerry. From Feb 4, 2013, the company's ticker symbol for
trading has been changed from "RIMM" to "BBRY" on NASDAQ. The
legal name of the company has not changed, for which the approval
of the official change by shareholders will be sought at the
company's Annual and Special Meeting on Jul 9, 2013. During the
time, the company will do business as BlackBerry.)
Why Kept Neutral?
Research In Motion is facing threats from an ever-increasing
competitive landscape, a stagnant product portfolio and an
unfavorable product mix. The launch of
) iPhone came as a big blow to the company. The situation
) launched its Android software and several handset manufacturers
adopted the operating system.
) Windows Phone software is another major competitor.
The company launched its much-awaited BB10-based smartphones.
However, it was greeted with a mixed response, especially across
the U.S. where it failed to create the expected demand. In the
reported quarter, the company sold just around 2.7 million
BB10-based smartphones. The total BlackBerry devices sold was 6.8
million, down 12.8% year over year. This indicates the company's
growing trouble with high-end smartphones.
Research In Motion provided a weak financial outlook for the
second quarter of fiscal 2014. The company expects marketing
expenses to increase sequentially mainly due to the global launch
of the BB10-based smartphones and BES 10. As a result, the
company will incur an operating loss. Management has failed to
keep up with the next-generation market trend, which keeps
changing with respect to technology, price and data plan,
provided by the wireless carriers.
Meanwhile, the stock price has plummeted nearly 48% in the
last year. Further, the company has a healthy balance sheet. We
believe that Research In Motion is currently fairly valued.
APPLE INC (AAPL): Free Stock Analysis Report
RESEARCH IN MOT (BBRY): Free Stock Analysis
GOOGLE INC-CL A (GOOG): Free Stock Analysis
MICROSOFT CORP (MSFT): Free Stock Analysis
To read this article on Zacks.com click here.