(This is an excerpt from an article I published on Seeking Alpha. Click here to read the entire piece.)
After listening to Research In Motion’s conference call explaining the company’s downward guidance Thursday night, I thought I would write a piece just as bullish as management’s insistence that longer-term upside prospects remain unchanged. However, writing out my notes and thoughts changed my mind, placing me right back on the fence regarding Research In Motion (RIMM).
…The conference call explaining this guidance had a very short intro that stuck to the script from the press release. It was next dominated by the questions of three analysts to which management provided lengthy responses. It was clear very quickly that the credibility of RIMM’s management had taken a huge hit. Management responded with a sometimes near-strident defense of the company and repeatedly referred to the company’s innovation and promising long-term prospects. However, the confident explanations that this miss was mainly about the natural bumps in a technology innovation cycle seemed to ring hollow. I could also hear hints of what must be management’s disappointment with the miss and frustration at being let down by the current bump in the road…
…I think the signature quote from the call was this unapologetic pronouncement: “Welcome to the reality of this transition.”
The overall technical outlook for RIMM continues to slowly erode, and this latest breakdown has me more comfortable being net short in the near-term…
*All charts created using TeleChart:
(Click here for my archived commentary on RIMM, including notes on all the buybacks over the past two years).
Be careful out there!
Full disclosure: net short RIMM, long AAPL