RIM prospects dire after launch delay: analysts

Fri Jun 29, 2012 11:19am EDT
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(Reuters) - Research In Motion Ltd could run out of cash and ultimately fail, even with the launch of its now-delayed BlackBerry 10 device early next year, Wall Street analysts said.

At least 10 brokerages cut their price targets on the stock, some by as much as 50 percent, a day after the company reported worse-than expected quarterly results and said it would delay the launch of its next-generation device to early 2013 from late this year.

RIM shares were down 16 percent in pre-market trading on the Nasdaq.

"If RIM continues to be run as it is, we believe that the company will eventually fail," Nomura Equity Research said.

"We do not expect RIM to successfully drive a turnaround of its financials, even with the launch of BB10 next year," the brokerage said in a note to clients, adding that its model assumes that RIM disappears by 2020 in a gradual decline.

BlackBerry 10, considered to be RIM's make-or-break product, was originally slated to be launched in the first quarter and the delay has already contributed to a 40 percent drop in the company's stock price so far this year.

"Given RIM's cash burn, BB10 can't come soon enough," Barclays said in a note to clients.

Analysts at Citi Investment Research and Jefferies slashed their price targets on the stock to $5.00 for RIM's U.S.-listed shares, a fall of 45 percent from Thursday's close.

"We believe fundamentals continue to get worse and RIMM could run out of cash and need to raise capital within two years implying that as time rolls forward, if we are correct, the value of RIMM continues to go lower," the Citi analysts said.   Continued...

A logo of the Blackberry maker's Research in Motion is seen on a building at the RIM Technology Park in Waterloo April 18, 2012. REUTERS/Mark Blinch