According to Research in Motion CEO Jim Balsillie, RIM has tapped into the same secret that once made Starbucks such a winner: addictive drugs are recession proof. Despite economic weakness, RIM has seen no signs of a business slowdown. What’s more, Jim says, fired Wall Street workers are so addicted to their units that the first thing they do after getting canned is rush out and buy new ones.
This and more from Citi analyst Jim Suva’s excellent one-on-one with Balsillie at the Mobile World Congress in Barcelona:
No slowdown. RIMM reads the same newspapers & watches the same TV as everyone else but has seen absolutely no signs of a slowdown in business;
Real-time visibility. RIMM gets daily data on new subscribers, shipments, net adds, etc.
Why no slowdown given the economic slowdown? The secular move toward mobile and smart phones is more than offsetting the economic slowdown, and international growth for RIMM is in its early stages. A fired Wall Street worker likely purchases a personal Blackberry soon after being let go. Also, less dependence on the financial services today vs. 5 years ago. Consumer & international growth more than offsetting financial services headwinds.
Europe enterprise and consumer adoption of converged data + voice is following the path which North America did several years ago. The past three days of RIMM meetings with carriers could not have gone any better as RIMM is bringing more applications to carriers and customer coupled with data compression to free up bandwidth helps make customers sticky, and carriers view RIMM as a partner rather than a competitor.
Carriers are very excited about RIMM’s future product roadmap.
Stocks Jim Suva loves:
RIMM (Buy) on fundamental growth of smart phones & EPS growth > sales growth (Target price $140),
MOT (Buy) on recent upgrade on structural change to help fix poor company fundamentals
Stocks he hates:
PALM: Sell rating on market share losses as the company is missing product cycles & having carrier/supply chain challenges (target price $4).
CELL is Hold rated as debt paydown likely makes EPS acceleration 2H08 loaded but $17.50 target price.
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