* RIM results trigger 22 pct slide in its shares
* Some of biggest shareholders show signs of bailing
* Citigroup cuts RIM to "sell" from "hold"
* CIBC, BMO, 7 others cut price targets
(Updates throughout)
By Alastair Sharp
TORONTO, June 17 (Reuters) - Research In Motion's (RIM.TO)
(RIMM.O)'s dismal results and failure to offer a clear strategy
to arrest its sad decline pushed its shares down more than 20
percent on Friday, drawing parallels with other technology
stars that have fallen from grace.
The BlackBerry maker's shares plummeted below $29, hitting
the lowest level in almost five years, the morning after it
missed some of its own limp forecasts and reported a drop in
quarterly profit. The shares are down more than 60 percent
since February.
And even more worrying, some of the company's largest
shareholders are showing signs of bailing out.
One of RIM's biggest investors, Jarisloswky Fraser, has
already cut its stake in half, according to Bloomberg.
Another investor is giving RIM six months to get its
business in order.
"I think in the next six months we'll have a much better
idea of where we stand," said the head of a fund with a major
stake. "They've laid out a business strategy and we're
measuring their ability to execute."
LOWER TARGETS
At least nine analysts lowered their price targets on the
stock, most of them highlighting what appears to be a
once-dynamic product development pipeline that's running dry.
RIM admitted delays in revamping an aging smartphone lineup
and slashed what most analysts viewed as an unattainable full
year earnings outlook. It also said it planned to cut an
unspecified number of jobs. [ID:nN16217792]
"Bottom line, we believe RIM has no short-term fixes to
improve product portfolio, brand perception, to reinvigorate
share gains, revenue growth and profitability," Citi's Jim Suva
wrote in a note to clients.
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Graphic on key RIM metrics r.reuters.com/ner22s
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RIM's difficulties bear a striking resemblance to recent
troubles at Finland's Nokia (NOK1V.HE), another struggling
national technology champion blindsided by the roaring success
of Apple's (AAPL.O) iPhone and handset makers using Google's
(GOOG.O) Android software. [ID:nL3E7H603G]
Some analysts drew comparisons between RIM and Nortel
Networks (NRTLQ.PK), the once-mighty Canadian equipment maker
that went into bankruptcy and is selling its final assets.
RIM's co-chief executives both sounded contrite on a
conference call with analysts. But analysts said neither
appeared to fully comprehend the challenges that lay ahead.
"The company is facing its greatest challenge, maybe in its
history, and each CEO continues to believe there is
unprecedented interest in their products," Deutsche Bank's
Brian Modoff wrote as he slashed his price target to $20 from
$45.
In the latest blow to its reputation, RIM has now has
delayed the launch of the touchscreen version of the Bold model
and at least one other device. That threatens its hard-won
relationships with North American and European carriers, which
expected the phones in July.
"We are concerned that RIM may have given them overly
optimistic launch timetables, which may end up alienating"
them, said Tero Kuittinen, an analyst from MKM Partners.
Cellular-enabled versions of RIM's PlayBook tablet, which
would give carriers a reason to push the iPad competitor,
aren't expected until autumn.
LEADERSHIP QUESTIONS
The dim results and outlook announced on Thursday also
fanned questions about RIM's co-chief executives.
Deutsche's Modoff was disappointed that neither Mike
Lazaridis nor Jim Balsillie described the planned job cuts as a
reorganization -- which he would view as a positive.
Both brushed off criticism of RIM's dual chief with what
seemed "more of a staged piece of theater than a serious answer
to a serious strategic question," Modoff said.
RIM has cut staff before, in a 2002 move still known around
its Waterloo, Ontario, headquarters as the "10 percent purge."
That followed a dip in revenue and spiraling costs as the
company started selling its early BlackBerry phones via
carriers.
But it has been all growth since then, with RIM now
boasting more than 17,000 employees.
To be sure, there were bright spots in first quarter
results. International revenue grew 67 percent partly on the
attractiveness of its BlackBerry Messenger instant messaging
service. But that appeal may not be enough.
"The concern is the sustainability of that low-end market
that is working for them now. I'm not sure over the long haul
if that texting arbitrage is going to keep them afloat," said
Matthew Robison from Wunderlich Securities, who suggested RIM
may retract into a niche space serving corporations.
RIM's U.S.-listed shares were down $7.91 at $27.42 by late
morning on Friday. The shares fell $6.53 to C$27.80 on the
Toronto Stock Exchange.
The table below lists the price target changes on RIM's
US-listed shares:
BROKERAGE PRICE TARGET RATING
New Old (In US$)
BMO 55 80 Outperform
Citigroup 25 45 Sell
CIBC 65 75 Sector outperformer
Jefferies 24 35 Underperform
National Bank 25 40 Underperform
Susquehanna 28 31 Negative
ThinkEquity 32 42 Hold
UBS 41 45 Neutral
(Additional reporting by Soham Chatterjee and Tenzin Pema in
Bangalore; Editing by Don Sebastian)
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