RIMM: Needham Cuts 2010 Estimate On Falling Margins

Success in consumer electronics will come at a price for Research in Motion ( RIMM ). That’s the assertion today by Needham & Co. analyst Charlie Wolf . Wolf asserts in a note to clients that RIM’s sales of new BlackBerry models “broke all records” in early December results, but nevertheless reiterates a “Hold” rating on the stock and cut his profit outlook for the fiscal year ‘10 ending in February of 2010. While sales are rising, margins are going down, is the message. RIM last Thursday reported sales and profit for the November quarter in line with expectations while offering a sales outlook for the current quarter that was higher than most expected, but also forecast a profit margin of 40% to 41% much lower than some expected. RIM’s spending money on marketing while building more complex phones for consumer prices, all of which takes a bite out of margins. Wolf says that sales in December so far for the BlackBerry Storm and Bold models have set records, but that “In our ... (link)