After the dipped first quarter revenues, which resulted in investors, customers and developers panicking and abandoning the company, it is an unsaid fact that RIM is almost done for good. Apart from one or two positive predictions for the company, a clear majority of experts have packed it off into the gutters, with major investors selling of their shares and developers stopping the production of new applications for its flagship brand, BlackBerry.
However, Macquaire Capital Market analysts have a different opinion altogether. The company believes that RIM’s stocks will rise to $40 within a year and gave the company an Outperform rating. RIM currently commands a 12.9% in the global smartphone market, behind Apple and Nokia. Even though shares have dropped to 16.5% from 41.3% since first quarter, it still is the third largest supplier of smartphones in United States.
Macquarie points out that while RIM crashed in the American market, the company’s performance in rest of the world in first fiscal quarter grew at almost 86%, a considerable rise. The firm attributes this growth due to the multiple advantages that only RIM possesses. These include low costs of handsets, subsidies and popularity of the BlackBerry devices, plus minimal data consumption, which is unique to BlackBerry, something that is of imperative importance in international market where carriers have restraints on spectrum. The lack of affordable iPhones in the market is also a major reason for these figures.
Macquarie’s report says that an opportunity for long term investors is created by sellside and buyside capitulation. It goes on to say that the company’s comparisons to Nortel or Nokia is unwarranted, as revenues of the device are expected to grow 81% in the second quarter, with Indonesia, Thailand and Latin America leading the way. They predict that the company will earn $3.4 billion at the end of fiscal year without any debts, even though there will be a predicted shortfall in earnings.
Macquarie predicts that the company’s growth in international market and its business will last longer than what other experts and firms believe. The report however, accepts that the company has suffered damages from communication gap with investors, delayed product launches, ineffective CEO system, strong competition, declining ASPs and poor decision making with respect to changing market trends. Most of these are said to be due to the firm’s own structural faults, alarming but not really impossible to manage. It goes on to say that shareholders have not really accounted for RIM’s performance in international business, with share prices possibly expressing negative value for the tablet market.
