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Technology Stocks : Research In Motion TSE RIM Nasdaq RIMM
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To: Garry O'krafka who started this subject8/8/2003 2:08:39 PM
From: Labrador   of 989
 
Ruling Slows Research in Motion

Research in Motion (RIMM: Nasdaq)
By Bear Stearns ($22.90, August 6, 2003)

WE ARE DOWNGRADING SHARES of Research in Motion from Peer Perform to Underperform owing to the implications and uncertainty resulting from the unfavorable legal outcome in its litigation with NTP Inc. There also is the potential for emerging competition especially from Good Technology and Dell (in 2004) as well as potentially from virtual private network (VPN)-based handhelds. The stock also has a lofty valuation.


On Tuesday, US District Court ruled against Research in Motion and issued -- and then stayed pending an appeal -- an injunction that would prohibit Research in Motion from making, using, or offering to sell handhelds, services or software in the U.S. -- giving NTP leverage to exact onerous licensing terms.

Research in Motion for its part asked the Appeals Court to stay the appeals process pending Patent Office's review of disputed patents. While this legal outcome has little near-term impact, it raises several concerns, including onerous licensing terms, along with uncertainty surrounding Research in Motion's ability to license its technology in the face of a legal cloud. The concern does not relate to short-term results as we are hearing favorable channel reports about demand.

We are maintaining our estimates for fiscal 2004, expecting earnings of $0.05 per share on revenue of $463 million. For fiscal 2005 we expect earnings of $0.30 per share on revenue of $586 million.

-- Andrew J. Neff
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