RIM’s Q2 will be grim, says Cormark analyst Tse

We now have a clearer picture than ever of when BlackBerry 10 devices will hit the shelves, says Cormark analyst Richard Tse. But the next three quarters, including today’s earnings announcement, will be tough sledding. After the bell today, Research in Motion (TSX:RIM) will report its Q2, 2013 results.

Expectations for the quarter, while bolstered slightly when CEO Thorsten Heins this week revealed that its subscriber base had grown to 80-million, are still low.

Cormark analyst Richard Tse says make no mistake, this quarter will be dismal.

What’s more, he doesn’t see things getting much better in the two quarters that round out the year. Tse thinks RIM will lose $434-million or $0.54 cents a share on revenue of $2.45 billion in Q2, and that the losses will continue into Q3 and Q4.

In the first quarter of fiscal 2013, RIM lost $518-million on revenue of $2.8-million.

At its BlackBerry Jam Developer Conference this week, management indicated that BlackBerry 10 devices are heading to carriers labs to begin the certification process next month. This, says Tse, gives us the best idea yet as to when the devices will hit the shelves. Carrier labs normally take 60 days to certify, he says, but the lag time could be as much as 120 days for new devices, which would mean BlackBerry 10 phones will be available sometime in February.

Tse says he is encouraged that BlackBerry 10 devices already seem to function well and will, at very least, bring RIM up to the level of what is current. But he believes it is nearly impossible to tell how they will perform under real world conditions. Another grey area, he says, is carrier support, particularly in developed markets. The Cormark analyst says this lack of visibility means he continues to value RIM on its breakup value, which he believes is $10. Tse has a Market Perform rating on the company.

At press time, shares of Research in Motion on the TSX were down 2.8% to $6.69.

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