Buy Research in Motion (RIMM) as shares tumble on Q4 EPS warning?


Shares of Research In Motion (NASDAQ: RIMM) are tumbling some 15% to well below $50 a share this morning after the smartphone maker updated its fourth-quarter guidance numbers.

RIM said that it expects a 20% jump in net subscriber account additions. The BlackBerry maker also reaffirmed its financial guidance for the fourth quarter and expects revenue for the quarter to be at or near the mid-point of the previously guided range. But -- and herein lies the problem -- it also expects to report Q4 gross margins and EPS at the low end of the company's previously issued guidance.

So, as RIMM shares sink some 15%, is the market overreacting and is this a good time to move into the stock?

It's a tough one to crack as traders seem to punish some stocks more than others. How many times have iPhone maker Apple Inc. (NASDAQ: AAPL) shares been pounded, only to rebound even during the same session? In fact, how many times has that happened to RIMM too?

Normally I'd say take advantage of today's dip, but ever since RIM launched the BlackBerry Storm, I have my doubts. RIM rushed into the market with the Storm, and if this product was supposed to establish the company in the consumer market, then it made a mistake -- even if it had a very good holiday season with the phone.

What's more worrying is the decline in its more powerful signature phones. RIM said that the product mix changed, probably meaning it sold more lower margin phones than it expected and less of the higher margin ones. If businesses are cutting that much and since the economy isn't making any signs of improving any time soon (stimulus or not), this is a worrying factor.

Still, the company is in a good financial position, and compared to others it's still a phenom. If investors believe in its long-term prospects, not doubt then, they should take advantage of today. Otherwise, if they're like me, they might want to stay on the sidelines a while longer.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA-89.2312,801.23
NASDAQ-23.352,903.88
S&P 500-9.311,342.64

Last updated: February 13, 2012: 06:17 AM

Hot Stocks

General Electric

18.875-0.255(-1.33)

Alcoa

10.29-0.35(-3.29)

Apple Inc

493.42+0.25(+0.05)

Google Inc 'A'

605.91-5.55(-0.91)

Bank of America

8.07-0.11(-1.34)

Wal-Mart Stores

61.90-0.06(-0.10)

Exxon Mobil Corp

83.80-1.08(-1.27)

Ford

12.44-0.25(-1.97)

Citigroup

32.925-0.735(-2.18)

IBM

192.42-0.71(-0.37)

Yahoo

16.14+0.14(+0.88)

Starbucks

48.82-0.38(-0.77)

Microsoft

30.495-0.275(-0.89)

Home Depot

45.33+0.06(+0.13)

DailyFinance Headlines

Benzinga Headlines

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

DailyFinance BlackBerry App

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

BioHealth Investor Headlines

Page Loaded in 1329131868726 ms.