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Research in Motion Likely to Beat Estimates

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Management knows investors are expecting a big fourth-quarter number, and will be working hard to deliver.

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Research in Motion (RIMM) has been stuck in the $60 to $80 range for a while now, but I think we could see a breakout to the upside in the near run. Here are some of my latest thoughts (in no particular order) ahead of the company's fourth-quarter numbers, which are due out on March 31:

1. When I think about Research in Motion and its products, I can't help but consider the big picture: where we're headed as a society, the way we communicate and live our daily lives, and the way businesses communicate. Ask yourself: Will people want to send and receive more or less data wirelessly in the future? As businesses transition away from fixed locations and workers do their thing remotely, will the importance of mobile devices increase or decrease in time? This is a major reason why I'm so into the BlackBerry maker, and why I think its earnings can take off in time. Simplistic or not, I think it's completely accurate.

2. Estimates have been moving up, which is always nice to see. Others may spy that too, which could inspire some fence-sitters to belly up.

3.
What about the fourth quarter? The Street is at $1.28. Management knows the score here -- they know investors are expecting a big number, and I think they'll be working like pack mules to make sure they deliver. I think it beats by at least a couple of cents.

4.
The stock isn't crazy cheap. Here in the mid-$70s as I write this, it's at 17.2 times this year's estimate. But that's not too unreasonable given its recent earnings beats coupled with its potential for accelerated revenue and earnings growth in the future (as demand for wireless devices rises). I think the shares can have some legs and finally get out of the aforementioned trading range.

5.
Will some attention start to shift to Palm (PALM) given the fact it's trading in the cellar right now? The savage beating it's taken has made me ponder whether bottom-fishing made sense. Don't get me wrong, I'm not. But writing that company off would be a mistake at this point. Motorola (MOT) is another company that I think will be worth picking up at some point. But right now, the earnings outlook for this year and next doesn't get my motor running.

6.
Long story short, I'm a Research in Motion bull, and think this quarter will be a good one. It's just a matter of time until the shares break out of their range.

Hey, have a great day!
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No positions in stocks mentioned.

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