The purpose of this blog is to retain an electronic diary/archive of key market moving news and events. The morning note includes my personal views on the financial markets and fundamental research pulled from newswires, Bloomberg, First Call, and other market intelligent websites and blogs. The note helps me prepare for the trading day and helps my PM position the porfolio for upcoming events and catalysts.
Thursday, September 25, 2008
RIMM: Gross Margins Under Pressure
RIMM shares are down 12 points to 85.50 after reporting earnings that missed by a penny (.86 cents vs. street at .87 cents). Revenues were in-line at 2.58 billion. For the second quarter in a row, RIMM saw clear pressure on their gross margins. Q3 gross margin guidance of 47% is well short of most analysts which are around 50%. RIMM also sees Q3 EPS of .89-.97 cents compared to consensus of .98 cents. The range is very wide and likely reflects the economic uncertainty and the potential for additional pricing pressure. Not a good report and I remain bearish on tech stocks primarily due to the gross margin compression that seems to be pervasive across the sector.
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