RIM: ‘Grim and getting grimmer’

Research In Motion is set to report its results for the fourth fiscal quarter and full fiscal year on Thursday, and Wall Street is bracing itself for another disappointing quarter. RIM’s fourth-quarter guidance came in worse than expected when the company posted its third-quarter results, and now several analysts are lowering their expectations even further. Pulling no punches, Barclays Capital’s Jeff Kvaal wrote in a note to investors titled “Grim and getting grimmer” that BlackBerry 7 sales have been poor thus far, and he has lowered his projections as a result. Read on for more.

“Our checks indicate that current demand is poor: BlackBerry 7 devices are now close to six months old, and our checks suggest that the initial enthusiasm post launch has tailed off,” the analyst wrote. “We model 11 million unit volumes in FYQ4, at the low end of the guidance range. Management’s aggressive marketing campaign, targeted for the U.S., appears not to have been as effective as hoped. BlackBerry 7 devices remain expensive comparatively and the once popular 8520 is going end of life.”

Kvaal sees RIM’s fourth-quarter revenue coming in at $4.5 billion, below RIM’s estimate of between $4.6 billion and $4.9 billion and the Street’s $4.55 billion consensus, and he anticipates earnings of $0.75 per share, also below RIM’s $0.80 to $0.95 projection and the Street’s consensus of $0.82 per share. He sees the situation getting worse before it improves, as RIM is not set to launch any new smartphones powered by its next-generation platform until some time this coming fall.

There is a glimmer of hope that will present itself in the near future, however, as RIM prepares to hand out thousands of BlackBerry 10 prototype smartphones during a conference in early May. The firm’s next-generation smartphone operating system will be a variation on its current QNX-based PlayBook OS, and the company’s future rests squarely on BlackBerry 10 adoption, first by developers and then by consumers and enterprise customers.

BGR will be reporting live from the annual BlackBerry World and BlackBerry Jam conferences from May 1st through May 3rd.

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