Earnings Guidance from Research in Motion Looks Gully

Event – After a mere 35 days post giving quarterly guidance, Thursday night RIMM preannounced lower-than-expected

Event – After a mere 35 days post giving quarterly guidance, Thursday night RIMM preannounced lower-than-expected May quarter results. May quarter EPS is now expected to be 11% lower to $1.30-$1.37 vs. $1.47-$1.55 previously (consensus $1.48) as a result of lower Blackberry smart phone sales in the US & Latin America coupled with RIMM's new products being delayed by a few weeks (not quarters) to the near end of the August quarter. Smart phone units will be at the lower end of 13.5-14.5 guidance with a mix shift toward lower ASP phones causing total sales to be slightly below the range of $5.2-5.6 billion (consensus $5.4b). Gross margins remain 41.5% as expected.

More Questions than Answers in Wireless Sector ; RIMM Recent Upgrade & Out-of-Consensus Preferred Play

Why Not Downgrade? (This would require the analyst to face reality which doesn't look very good) But Anyways citibank didn't expect the negative announcement nor did others believe others did as the stock traded down 11-12% after hours.

Citibank is not downgrading the name because: 1) they believe this preannouncement de-risks the quarter & sets the stage for investors to focus on the company's upcoming investor day on May 2 where the company will likely showcase its new products which it will include several touch products, improved web browser, improved graphics, faster hardware, higher memory, improved battery life and enhanced user interface rather than having such bad news overshadow the May 2 event; 2) RIMM's new products are delayed only a few weeks & not quarters; 3) tech supply chain confirms strong order build plans for RIMM's new products; 4) FY EPS guidance to be $7.50 compares to consensus of $6.87 (consensus likely goes even lower) revealing that both the buy side and sell side do not believe this $7.50 guidance so sets up potential positive EPS revisions; 5) stock is trading at less than 7x earnings; 6) Santa Clause believes RIMM will announce a 10% stock buy-back in July similar to last year which could add $0.50-$0.75 to estimates; 7) RIMM is still growing units & sales 20%+ y/y even in this challenging quarter before the transition to new products; and 8) sentiment is very negative. Tech Update: (MSFT) Loses Market Share While Intel Discovers a Hole in its Order Log $INTC, $AAPL, $MSFT, $RIMM