BofA Merrill Lynch: Constant miscalculation of the situation Rim has long challenged the grim

Sina Science and technology news Canada Rim June 16 After the announcement of the less than expected 1th-quarter financial results and a downgrade, the Bank of America Merrill Lynch's many concerns were confirmed, and then again lowered rim's earnings expectations and target share price. The Bank of America Merrill Lynch believes that new product launches are a recent opportunity for rim to provide support for current stock prices, face severe challenges in the long run, and the decline in corporate user market share is inevitable; the new operating system QNX lacks application and is homogeneous with android/iphone. But given the current low valuations, BofA Merrill maintained a neutral rating for rim, with a target of $36 trillion, which is well below the historical average and is comparable to the beleaguered Nokia. June 16 rim trading plunged 14.35%. RIM's share price trend in the past year is the Bank of America Merrill Lynch Research Digest: Quarterly earnings show RIM's overall weakness for months we criticized RIM for its slow response, pointing to weak corporate governance, poor product mix, a lot of risk in corporate user business and overly optimistic financial results. RIM's quarterly earnings and financial estimates last night confirmed our concerns, so we lowered our earnings forecasts for the 2012/13 fiscal year to 5.26/5.38 (previously expected to be 6.12/6.83) and lowered the expected P/E earnings from 8 times to about 7 times times.　　The 45-dollar target share price has also been adjusted to $36. Recent opportunities to maintain neutral ratings we think Rim faces a very serious long-term challenge, but there are some recent positive factors that can support stock prices in the current position. RIM's spending will continue to fall by about 11% per cent, boosting earnings for the second half of the year. Although new product launches for enterprise users have been postponed to September, the introduction of new products can have a significant impact on earnings per share. New products for the current user needs, they are looking for a touch screen wide, browsing experience better, faster equipment.　　In addition to the current dynamic P/E ratio of less than 6 times times, the 14% 2012 free cash flow discount rate is one of the main reasons we maintain a neutral rating. The long-term bearish market share of corporate users we do not recognise RIM's ability to create value in the future. We think rim's loss of market share in the corporate user sector is inevitable because of the considerable downside to the profitability outlook. The ecosystem built around the new operating system is still weak, its application is not rich, and it does not reflect a relatively android/iphone differentiation. In our view, RIM's adaptation to the changeable environment has been too slow, and it has proved that it always misjudged consumer demand.　　Cost cuts may be good for profitability in the short term, but earnings will continue to fall unless companies improve their ability to cater to the tastes of consumers. Investment perspective our "neutral" rating is based on the following concerns: 1 new products launched in 2011 are not competitive; 2 tablet innovation cannot succeed; 3 from AndroidThe growing pressure on OID and iphone has made it powerless to improve its competitive position in the developed world; 4 the cost of products and the increase in investment expenditure make gross profit margin and operating profit margin at risk; 5. Growth in emerging market share is unable to support the current rich average price structure. Base of target stock valuation we have a "neutral" rating on rim, with a target of $36 trillion, 7 times times the expected earnings of 5.26 dollars per share for fiscal 2012. Our choice of 7 times multiples is much lower than Rim's historical P/E median (about 16 times times), but it is consistent with Nokia's current earnings ratio.　　We did this to show the uncertainty about RIM's new product success and the increased competition from Apple and Android. The target share price is at risk 1. The smartphone market is slowing as a result of weak macroeconomic growth; 2 The price of hardware sales continued to lower pressure margins; 3) The competition risk caused by Apple, Google (Android), Nokia, Motorola, Samsung and Dopod (HTC), 4 The investment growth required for new product development; 5) Emerging markets and prepaid user growth are not commensurate with the product mix; 6. New products fail to succeed in developed markets; 7 The earthquake in Japan has the potential to disrupt the company's supply chain. (Tsumer)