Notable Calls

- CLSA is cutting RIMM to Underperform from Buy saying the recent 44% rally since 1 September leaves limited upside despite the likelihood that next week's FQ3 (Nov) results (after the close on 16 December) are towards the high end of the outlook for sales, units and EPS. Firm bumps up our FQ3 forecasts to account for solid demand for Torch and emerging markets momentum. They incorporate some initial projections for RIM's Playbook tablet (scheduled to launch in CQ1), which helped ignite the recent rally along with an expected seamless transition to the recently acquired QNX operating system, thereby leaving little room for disappointment

Tablets: Apple is the incumbent, not RIM
CLSA expects Playbook to have limited EPS impact (~$0.05-0.10 in F2012) especially given the likelihood that the product is gross margin dilutive (a key metric for the stock). Unlike smartphones, where iPhone had a high hurdle to overcome in penetrating enterprises (dominated by incumbent RIM), the iPad is now the early incumbent in the enterprise that RIM would need to one-up in its features (or one-down in price). This could prove an uphill battle particularly as iPad enterprise users access corporate intranets via browsers, which was not the case with accessing corporate push-email. By the time RIM sells its first Playbook, CLSA estimates Apple will have already sold ~17m iPads.

Firm maintains their $68 price target.

- Gleatcher (the former First Albany, Amtech etc) is downgrading RIMM to Neutral from Buy saying they believe the recent move captures near-term strength and cannot justify material multiple expansion from here given their projection of slowing earnings growth over the next 2 years. Firm sees increased competition in 2011 as smart phones move to the mid-range, alternative solutions penetrate the enterprise, and RIMM's bandwidth efficiency has not yet translated to the consumer.

Near-term strong. Firm has raised November to $1.69 on $5.5bil, at the upper-end of RIMM's guidance and above consensus of $1.63 on $5.4bil. Their forecast assumes 14.2mil units, 5.1mil subscriber additions, $310 ASP and 42.3% gross margins. They have also raised their February forecasts.

Loyal Blackberry fans ripe for upgrade. RIMM’s Torch will expand from 1 carrier (AT&T launched 8/12/2010), to 75 in November and 200+ in February. Firm sees 2-3 solid quarters of sell-through as a percentage of its approximate 55mil subscriber base upgrades to the Torch and future Blackberry 6.0 platforms.

Competition to accelerate in CY11. Gleacher believes the near-term strength will prove temporary as the upgrade cycle completes and competition accelerates. RIMM has enjoyed a "price umbrella" as the iPhone has stayed in the $600 range and Android's have fallen from the $450 range to $350 over the past year. They think competition will accelerate in CY11 as Samsung/MOT/HTC broaden product offerings and #3 contenders Win7 and NOK catch up and expand into Europe, Asia and Latin America

Conclusion. Firm''s $70 target (up from $60) is based on 11.1x their FY13 (Feb ending, so essentially CY12) estimate, not including current net cash of $3.71. They do expect a strong quarter and outlook, but $70 is not enough for new money given competitive threats and potential execution risk on product launches following the 50% move since September. Next catalyst: Nov. report on Thursday, 12/16.

Notablecalls: I think this market is due for a pull-back and RIMM is my poison of choice. Not for the faint hearted obviously. Adjust your risk accordingly.

Analog -- according to FBN Securities: Yesterday the market was working on a very rare "all up"" day with equities, USD, gold, bonds, and crude all in the green... apparently this has happened 12 times since 2008 and the mkt was down the next day 10 of them.

(Amusing. nothing to do with my feel towards the mkt, obv)