Recession Could Crush Palm, Hurt RIM, Ding Motorola: Citi

We already know that the softening U.S. economy has affected telecom carriers AT&T and Comcast. How about mobile phone makers? Yep, they’re at risk too.

In a note today, Citi analyst Jim Suva runs a recession scenario through his models for Research In Motion (RIMM), Palm (PALM), and Motorola (MOT). His conclusion: The companies with the most business in North America will get hit hardest.

  • A recession is awful news for Palm, which is most dependent on U.S. sales. Jim redicts Palm shares could trade down to the $3 to $4 range, down as much as 33% from its current price of $6.
  • BlackBerry maker Research In Motion could see its sales drop, and the growth company’s multiple could come down, too. Jim predicts that RIMM could fall 25%, from its $84 to $63 in a “worst-case, global recession.” A better case scenario is a North America-only recession, which he says would cost RIMM investors a mere 11%.
  • Motorola, Jim says, does about 50% of its mobile phone sales in North America. But it’s in lousy enough shape that a recession isn’t its biggest worry. Still, he says, a slowdown could shave 17% of off MOT shares, dropping them from $11.50 to $9.50.

Who won’t get hit as hard? We think Nokia (NOK), which sold less than 4% of its 134 million mobile phones last quarter in North America — and isn’t in Suva’s note — is in pretty good shape.

See Also: Apple’s “Useless” iPhone Takes 3rd Place In Q4

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