Citigroup is out positive on Research in Motion (NASDAQ:RIMM) after hosting an investor call on Feb 4th with the head of Citi's BlackBerry Program that yielded valuable insights from a key decision-maker within one of RIM's largest customers. Reiterates Buy and $140 target.
Key Takeaways - 1) Productivity benefits shelter RIM from layoffs as RIM increasingly is viewed as a non-discretionary spend. 2) Penetration rate of 10% does not suggest saturation. 3) Replacement rate is surprisingly low (avg. useful life is about 2 years). 4) Very low re-deployment of deactivated devices (~5%) further mitigates risk from financial services. 5) MSFT Exchange 2007 not a material threat for some time. 6) Competitive solutions from MOT and NOK do not seem compelling currently.
Firm believes the recent volatility and pullback in RIM shares has been largely due to macro uncertainty and stock market jitters. They note that RIM posted strong Nov-Q results and guidance in December despite a similar same macro backdrop.
Overall, they believe the points brought up during the call are highly supportive of their bull case on RIM.
Key Takeaways - 1) Productivity benefits shelter RIM from layoffs as RIM increasingly is viewed as a non-discretionary spend. 2) Penetration rate of 10% does not suggest saturation. 3) Replacement rate is surprisingly low (avg. useful life is about 2 years). 4) Very low re-deployment of deactivated devices (~5%) further mitigates risk from financial services. 5) MSFT Exchange 2007 not a material threat for some time. 6) Competitive solutions from MOT and NOK do not seem compelling currently.
Firm believes the recent volatility and pullback in RIM shares has been largely due to macro uncertainty and stock market jitters. They note that RIM posted strong Nov-Q results and guidance in December despite a similar same macro backdrop.
Overall, they believe the points brought up during the call are highly supportive of their bull case on RIM.
Also 13 out of the last 14 quarters RIMM has had earnings surprises to the up side.
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