We reaffirm our long-term Neutral recommendation on
Research In Motion Ltd.
). The beleaguered BlackBerry handset manufacturer posted a
better than expected third quarter of fiscal 2013. Both the top
and the bottom line outpaced the Zacks Consensus Estimates. In
the previous quarter, Research In Motion improved its sagging
gross margin and its cash position solidified for the third
quarter in a row.
We believe a real turnaround of Research In Motion will take
more time than previously expected as we remain uncertain about
when the company will achieve profitability. Change in
revenue model of high-margin Services segment and a drop in
BlackBerry's global subscriber's base are other near term
concerns. However,the market is eagerly waiting for the company's
next-generation Blackberry 10-based devices which are slated for
launch onJanuary 30, 2013.
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 this operating system. We believe management has so far
failed to do proper research which can place the company's motion
Meanwhile, Research In Motion is currently on the verge of
launching its QMX software-based smartphones, popularly known as
BlackBerry 10. Management has high hopes on this operating system
as it is believed to be different from the existing products in
the market with respect to navigation, software integration,
speed and convenience of gesture reorganization, touch screen,
and unique security. BlackBerry 10-based smartphones are
scheduled to launch on January 30, 2013.
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