Struggling smartphone manufacturer
Research in Motion Limited
(
RIMM
) has signed a licensing deal with the world's largest software
manufacturer
Microsoft Corporation
(
MSFT
) that will allow its customers to store and transfer larger files
more easily.
RIMM will use Microsoft's Extended File Allocation Table or
exFAT, which facilitates clear viewing and expansion of larger
files like high resolution photos and videos. Additionally this
latest technology will also provide a seamless data transferability
and easy file exchange features between desktop PCs and other
electronic devices.
The latest smartphone and tablets require superior viewing
capacity to display high resolution photos and videos than
traditional feature phones. According to the innovator of the
technology, the new exFAT is a considerable improvement over the
older FAT system, and can support five times larger files than its
predecessors. Microsoft has similar agreements with electronic
goods manufacturer
Panasonic Corporation
(
PC
)
Sony
Corporation
(
SNE
) and
Canon Inc
(
CAJ
).
Research in Motion is facing severe problems due to an
increasingly competitive landscape, primarily from
Apple Inc.
's (
AAPL
) iPhone and an array of other smartphone manufacturers running on
Google Inc.
's (
GOOG
) Android platform. Lack of applications in its legacy
handsets mainly contributed to Research in Motion's huge market
share loss in the high-end smartphone segment.
The Waterloo, Ontario-based company is betting on its new
Blackberry 10 OS-based devices, which are slated to release in the
first half of 2013, may act as a potential game changer for
Research in Motion. At present, as customers are preferring their
phones over PCs and laptops to exchange data and videos we believe
this patent deal will offer a value added service for its latest
offering and will cater to the specific needs of the Blackberry
users.
The current Zacks Consensus Estimate for Research in Motion is
pegged at a loss of 46 cents for the fiscal second quarter 2013
with a growth rate estimate of (157.34%). For fiscal 2013, the
Zacks Consensus Estimate stands at a loss of $1.49 with a growth
rate of (135.42%) and for fiscal 2014 the Zacks Consensus Estimate
stands at a loss of 73 cents with a growth rate of 51.02%.
Recommendation:
We, maintain our long-term Neutral recommendation on Research in
Motion. Currently, RIMM has a Zacks #4 Rank, implying a Sell rating
over the short term.
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