Tuesday, February 05, 2008

Research in Motion (NASDAQ:RIMM): Citi's investor call highly supportive of their bull case on RIM

- Citigroup is out positive on Research in Motion (NASDAQ:RIMM) after hosting an investor call on Feb 4th with the head of Citi's BlackBerry Program that yielded valuable insights from a key decision-maker within one of RIM's largest customers. Reiterates Buy and $140 tgt.

Key Takeaways - 1) Productivity benefits shelter RIM from layoffs as RIM increasingly is viewed as a non-discretionary spend. 2) Penetration rate of 10% does not suggest saturation. 3) Replacement rate is surprisingly low (avg. useful life is about 2 years). 4) Very low re-deployment of deactivated devices (~5%) further mitigates risk from financial services. 5) MSFT Exchange 2007 not a material threat for some time. 6) Competitive solutions from MOT and NOK do not seem compelling currently.

Firm believes the recent volatility and pullback in RIM shares has been largely due to macro uncertainty and stock market jitters. They note that RIM posted strong Nov-Q results and guidance in Dec despite a similar same macro backdrop.

Overall, they believe the points brought up during the call are highly supportive of their bull case on RIM.

Notablecalls: I think this call warrants some attention as the stock looks to be bottoming here. There has been lots of neg chatter regarding RIMM's fin. exposure (12% of revs) but the stock is refusing to go down. That indicates to me that at least a s-t bottom is in.

Now the attention will turn to growth opportunities in Europe and Asia.

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