After Research in Motion’s disappointing second quarter fiscal 2012 results RBC Capital Markets analysts released a list of 4 challenges the firm believes RIM’s failure to address led up to the companies poor showing in Q2. RBC also believes that RIM’s valuation which is at an all time low (4x) won’t improve until this challenge areas are addressed.
The 4 challenges are:
- Backwards-Looking, Uncompetitive Products and Software. Four years after iPhone launched, RIM still hasn’t launched competitive Smartphone innovations or addressed its ‘app gap’. With QNX, we believe RIM needs to renew its focus on innovative, bold user experiences.
- Marketing and Launch Execution. RIM continues to ship products late (e.g., BlackBerry 7) and incomplete (PlayBook minus 3G/email, underpowered Torch 1; Torch 9850/9860 with inferior virtual keyboard, etc.). RIM needs to improve execution as competitors are bringing their ‘A’ game, and have out-maneuvered RIM on marketing, positioning it as passé.
- Investor Credibility/Visibility. RIM’s apparent inability to offer reliable guidance (including Q2 miss and retracting over-optimistic projections) has created, in our opinion, a formidable credibility gap with the investment community that needs correcting.
- Governance. To us, RIM’s board has an opportunity to take a more active role in providing a ‘check and balance’ on key management decisions.
RBC lowered it’s price target from $35 down to $29, however, $29 is almost 27% higher than the current stock price of $21.26.
[ Via WSJ ]