Missed it by that much...
The Good: Q1 revenues up 107% to $2.24B. Net income was $483M, or 84¢ a share. Added 2.3M new subscribers to existing 14M. Ramping its investments to capture greater market share. RIMM shares have been up up 70% in the past 5 months.
The Bad: The Street expected $2.27B revenues and 85¢ a share . Operating costs rose 22%. Weak guidance, lowering profit forecast from 90¢ to between 84¢ /89¢ per diluted share. A ramp of capital expenditures from the $190M Q1 to $250M over the next two quarters.The Ugly: This $150 bloated stock is now a $120 stock. A much hyped Horseman cannot report a lukewarm, inline earnings report. The Street will punish that and it did, by taking RIM to the woodshed Thursday. For those of you who've been following my blog, you know I've been trading in and out of RIMM weekly. And so here is where reality and P/E deflation finally begin to set in. RIMM has been up a dastardly 70% over the past 5 months. The premium for a company that has such a narrow niche has just started its discount. And India, one of the most population dense markets in the world may ban them due to regulatory restrictions . The handset market has always been an overcrowded raft in a market and economy that is dehydrating fast. Someone has to be pushed off.
And with the 3G iPhone supporting corporate email and and adding apps, the RIMM ship seems to have taken on a cruise missile - to its hull. The Blackberry Bold delay could be the next hit and may bring down this ship to the double digits fast. I've had little positive to say about RIM on this blog since it's inception. I'm neither bear nor bull when it comes to RIMM. Just a trader who is obsessive about being on the right side of the trade. Yesterdays earnings should have sent a depth charge (okay, no more naval metaphors, I promise) to RIMM Bulls and make evident the RIMM Trader's mantra that I've been repeating all year: RIMM is a horrible investment but a fantastic trade.
Trade Signal of the Day: Sell
Disclosure: Covered remaining shorts/In cash
Quote of the Day
"He will win who knows when to fight and when not to fight." - Sun Tzu, The Art of War
Video of the Day:
How Cash Escaped RIM
3 comments:
Was the $6.5 plus movement on a Lehman comment the redux of July 1 move or did the world turn RIMM side up again?
RIMM appears to be trading less on fundamentals (discounted) and technicals (lagging) right now and more on where the big houses want to take it. The short thesis is winding up and I'll be tracking for a long entry on Monday's open. Will give details in my next post over the weekend.
So now it's a broken MoMo stock. Those can get pretty boring (see MIcrosoft after 2000.) What're ya gonna trade next when RIMM no longer excites?
(Also, just wanted to drop in and say hi...)
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