Whatever happened to the days of "being one with nature," and "getting away from it all"? First cell phones and pagers made us accessible 24 hours a day, and now Research In Motion's
The competition to produce devices that follow people around like a loyal dog is escalating; wireless technology is busting from the walls of such companies as Microsoft
Research In Motion announced its second-quarter results yesterday, which were in line with estimates but left analysts looking for more. Although revenues more than doubled (and slightly exceeded estimates) and earnings of $0.45 per share bested the consensus estimate of $0.43 per share (and last year's $0.36 per share), it appears that investors were looking for blowout results. The shares are down nearly 2% in early trading, showcasing the sometimes unreal expectations that growth companies must combat.
The company has gained additional exposure in countries like Belgium, Australia, Hungary, France, Hong Kong, China, New Zealand, and Poland from leading wireless companies such as Vodafone
The company currently derives about 71% of its revenues from handheld products (53% last year), 18% from service (32% last year), 8% from software licenses, and 3% results from the infamous "other" revenue. This trend highlights the company's lessening dependence on the variable returns of service in favor of its proprietary hardware technology.
Going forward, the company held firm its revenue guidance for the third quarter of fiscal 2005 at $340 million to $360 million, which is barely in the scope of the previous consensus estimate of $357.5 million; fourth-quarter revenue is forecasted in the range of $385 million to $410 million.
Research In Motion's adjusted earnings are expected to be in the range of $0.50 to $0.55 per share, which is above the current analysts' expectations of $0.49 per share; fourth-quarter earnings are expected to be about $0.57 to $0.63 per share. The bottom line is that the shares are trading at a lofty 34 times the fiscal 2006 earnings estimate of $2.23 per share, which appears to be relatively expensive against its 22% expected earnings growth.
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Fool contributor Phil Wohl spent more than 12 years on Wall Street and likes gadgets as much as the next person. He does not own shares of any of the company mentioned.