RIM Q4 Preview: Major Upside or Bust (RIMM)

We already know that BlackBerry maker Research In Motion (RIMM) had a good quarter: In late February, the company jacked its subscriber guidance by up to 20% . The question is whether the subscriber upside extended to revenue and earnings, which it should have. If it didn't, look out below.

Specifically, for the stock to go up from here, RIMM needs to handily beat revenue and EPS estimates AND significantly raise guidance (see below).

What will we be looking out for when RIM posts Q4 results this afternoon?

First, did increased subscribers really generate higher sales and profits ? When RIM increased its subscriber guidance 15%-20% in February, it didn't touch revenue or EPS guidance . So is RIM just setting the table for a blowout? Or are subscriber acquisition costs and lower-priced BlackBerry Pearl sales reducing the company's per-unit top and bottom lines?

And second, how's the mix between enterprise and "pro-sumer" sales going? Last quarter, 34% of RIM's subscribers were "non-enterprise," up from 30% the quarter before. The consumer smartphone market is growing fast -- good news for RIM -- but, especially in a recession, non-enterprise customers are more likely to buy cheaper phones (like the Pearl) and aren't as tied down to BlackBerry back-end systems as business customers are .

Here's what analysts are expecting:

• Revenue: $1.85 billion (vs. $1.80 billiion to $1.87 billion guidance). Expect significant upside here.
  
• EPS: 70 cents (vs. 66 cents to 70 cents guidance, 76 cents whisper number)
• Subscriber net additions: Anything above 2.5 million is "very bullish," according to AmTech (vs. 2.1 million to 2.2 million guidance)
• Guidance: Current consensus for FQ1 is $2.01 billion of revenue and $0.75 of EPS. These estimates likely need to go up at least 5%-10% to avoid a stock drop.
  

eBay Selling Skype to Google? Let Us Pray

TechCrunch revives the Google-Skype talk that first surfaced a few months back (GOOG). As we've argued here ad nauseum, eBay (EBAY) has no reason to own Skype and every reason to sell it. Skype, meanwhile, would fit nicely within the communications platforms of Google, Microsoft (MSFT), or Yahoo (YHOO).

With its strength in mail, Yahoo would be the best fit. Alas, Yahoo can't afford Skype anymore (expect by using Microsoft-bid-inflated stock, which, for obvious reasons, eBay would probably be unwilling to take). Microsoft has its hands full with Yahoo, although one imagines that it could find room to at least take a peek at this one. And that leaves Google.

How much might Skype go for? Probably about what eBay bought it for--$3.1 billion--or perhaps as much as $4 billion. Skype is booking about $400 million in revenue now, and it's conceivable the company could command 10-times that.

Once integrated with Gmail, contacs, etc., Skype would give Google the most complete all around communications platform on the web. Google's global dominance, meanwhile, would provide an awesome distribution platform for Skype. Sounds like a match made in heaven. (Unlike eBay-Skype, which has always been a match made in delusion).

Something big is brewing between Google and Ebay's Skype, we've heard from multiple sources. Actually, for weeks now there have been low level rumors of the two companies talking, but nailing down any details was difficult. New information, however, suggests that they are in current talks and that a partnership or outright acquisition may be announced in the near future.

Muxtape: Make A Mix Tape, Make Some Cash?

Subscribe with an RSS reader Older News Archive Add news to your web site