Foolish Forecast: Research In Motion, in Motion

On Thursday night, you can expect a signal from Canada. Toronto-based BlackBerry maker Research In Motion (Nasdaq: RIMM  ) reports earnings at that time, and I'll bet many investors will receive that update on their beloved digital leashes. Let's see what it's all aboot, eh?

What analysts say:

  • Buy, sell, or waffle? According to Reuters Estimates, a whopping 32 analysts follow the company. There are 18 buy ratings on this stock, 13 holds, and a lonely single seller. In our Motley Fool CAPS investor community of more than 30,000 rated Fools like you and me, nearly 1,200 users have weighed in with ratings that make it a rock-steady one-star stock. Oops.
  • Revenues. The consensus sales forecast says $1.05 billion, or 72% above last year's $613 million. The company officially expects to collect $1.02 billion to $1.07 billion.
  • Earnings. $1.05 of profit per share would satisfy the average analyst -- that's up from $0.70 per share last year. Management guidance allows for a range between $0.99 and $1.07 per share.

What management says:
In the year-end report three months ago, co-CEO Jim Balsillie was pleased with his company's record revenues and with the cool million new subscribers it added in just the fourth quarter. "We are entering fiscal 2008 with very healthy subscriber growth momentum, a strong slate of products and services, exceptional partnerships, and a growing market leadership position," he said. "We look forward to building on this momentum and further extending the market opportunity for RIM and its partners in the coming year."

What management does:
The growth story continues, albeit with a few ups and downs along the way. What's impressive here isn't the massive growth by itself, though -- it's the ability to keep margins fairly stable across the board while growing like that.

Margins

11/2005

3/2006

6/2006

9/2006

12/2006

3/2007

Gross

55.7%

55.2%

55.2%

55.5%

55.1%

54.6%

Operating

31.3%

29.9%

28.9%

28.0%

27.1%

26.6%

Net

18.3%

18.1%

17.0%

16.9%

17.2%

20.8%

YOY Growth

11/2005

3/2006

6/2006

9/2006

12/2006

3/2007

Revenue

65.1%

53.0%

45.0%

39.6%

39.7%

47.0%

Earnings

35.9%

82.2%

30.4%

25.9%

31.2%

68.6%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
The biggest knock on RIM these days is valuation. At a stock price about 50 times trailing earnings, compared with a trailing P/E of 34 a year ago, it's not a cheap stock by that traditional measure. Using Reuters estimates for the coming year instead, we get a forward P/E of about 35 times earnings, which is a bit more reasonable but still not a deep value proposition.

The days of legal trouble appear to be over for now. The storm of patent lawsuits against the company blew over last year, with just one patent troll still hanging in there, and while the SEC's inquiry into RIM's options grants is still going on, management's internal investigation is complete and its financial filings are up to date.

The Apple (Nasdaq: AAPL  ) iPhone is launching in a matter of days, but that much-anticipated device should pose more of a threat to consumer-oriented smartphones like the Palm (Nasdaq: PALM  ) Treo and Nokia (NYSE: NOK  ) E62 than to RIM's corporate lifelines. And amidst the bucketloads of reports on weakness in the high-end mobile gadgetry market, the various BlackBerries have been chugging along just fine over the past year.

In other words, I'm not expecting any bad news this time. But keep an eye out for comments about market health and the expected impact of unnamed competing products for a preview of how the iPhone might shake the market up. Know your enemies.

Palm is a Motley Fool Stock Advisor recommendation. Take a peek at the newsletter service free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. At the time of writing, RIM had 666 "underperform" ratings in CAPS, for what it's worth. You can check out Anders' holdings if you like, and Foolish disclosure will help you find the road ahead.


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