Sterne Agee: RIM’s Q2 may beat the Street, long-term still a concern

As RIM prepares to report its earnings on Thursday for the second fiscal second quarter of 2012, all eyes are turning north following the Waterloo, Ontario-based vendor’s first-quarter report, which was something of a bloodbath. RIM’s first quarter performance wasn’t abysmal — the company did see gains in several international markets — but it missed the Street’s consensus by a wide margin, trimmed its second-quarter guidance and stated that would soon be laying off workers in an effort to streamline operations. RIM has since launched its first wave of BlackBerry 7 smartphones and while sales of its new devices won’t really be reflected in its second-quarter earnings, some analysts still believe RIM could beat Wall Street’s expectations when it reports later this week. Read on for more.

RBC Capital Markets analyst Mike Abramsky projected a second-quarter win for RIM in his note last week, and now Sterne Agee analyst Shaw Wu weighs in, noting that RIM could beat the Street when it reports after the market closes on Thursday. “We anticipate the company to meet or exceed consensus estimates of $4.5 billion in revenue and $0.67 in EPS (we have in-line revenue and 3 cents better EPS),” the analyst wrote. He believes RIM shipped 11.6 million handsets and 400,000 PlayBooks in the second quarter.

Looking forward to the third quarter, Wu’s checks indicate that RIM’s BlackBerry 7 phones are seeing good interest in terms of upgrade sales, so guidance is “likely better than feared.” The analyst also reasserted his earlier comments that carriers looking for a viable third option to shift some focus from Apple’s iOS and Google’s Android may turn to BlackBerry.

The long-term impact of BlackBerry 7 and QNX devices is still a big question mark however, and Wu isn’t yet sold that there is a pot of gold at the end of this rainbow. As a result, the analyst trimmed his projections moving forward. Wu now estimates that RIM’s full-year fiscal 2012 earnings will miss the Street’s consensus of $20.4 billion in revenue and EPS of $5.11 — he sees $20.3 billion and $5.05 — and fiscal 2013 earnings are now estimated to narrowly top the Street’s consensus of $22 billion in revenue (Wu sees $22.3 billion) and earnings of $5.22 per share (Wu sees $5.25).

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