Research In Motion Ltd. (RIM/TSX) reports third-quarter results for fiscal 2009 after markets close today, and given the uncertainty in stock markets, you can't help but excuse Wall Street for feeling rather bearish on the BlackBerry maker.

This month, RIM issued a rare profit warning, advising that it would report revenue in the range of US$2.75-billion to US$2.78-billion, earnings per share between US81¢ and US83¢, and gain 2.6 million new subscribers.

Still, the company's stock is down 55% over the past year on the Toronto Stock Exchange and currently trades around $50 per share -- a far cry from the heady days of summer that saw RIM around the $140 mark, when the company could proudly boast being one of Canada's largest in terms of market capitalization.

However, the end of RIM's decline could be near, said Deepak Chopra, an analyst with Genuity Capital Markets. In a report, Mr. Chopra said RIM has the opportunity to be flat or up in its quarterly results when most companies are seeing massive shortfalls.

The company continues to gain market share, it is in multiple new product cycles and its valuation is at or near trough levels.

Mr. Chopra is expecting RIM to report revenue of US$2.77-billion and US80¢ in EPS, in line with the company's guidance, while forecasting 6.5 million units sold.

Only time will tell how RIM's margins will be impacted by its push into the consumer space, noted Citigroup analyst Jim Suva.

The company said during its last quarterly results that margins will shrink to 47% from 50.7% -- a drastic drop but one deemed necessary to make a strong push with its new product lineup.

"We don't think these issues are resolved for at least a couple of more quarters, but our concern is that consensus revenues and margins are too high, setting up for further EPS reductions," Mr. Suva said.

He anticipates RIM will report a significant channel inventory build given the delays in the BlackBerry Storm's release while forecasting revenue of US$2.79-billion, US81¢ in EPS, and 2.58 million new subscribers.

Meanwhile, RBC Capital Markets analyst Mike Abramsky also expects RIM to report results in-line with its profit warning guidance, US$2.78-billion in revenue, US82¢ in EPS and 2.6 million new subscribers.

He said in a note that RIM's growth will undoubtedly slow down due to a number of challenges during its multiple product launches in the quarter as well as a spending slowdown. However, it still remains a strong company to invest in.

"While facing both external headwinds and execution challenges related to its consumer transition, RIM remains a strong competitor with intact fundamentals and competitive advantages, in our view," said Mr. Abramsky, who maintains a "sector perform" rating with a US$45 price target.

"While risks to growth and margins remain, we do expect RIM to address its execution issues in time. RIM remains in our view, positioned for long-term Smartphone leadership within the attractive Smartphone."

Investors should focus on RIM's next quarterly guidance to gauge overall demand in the declining economy, said Research Capital analyst Nick Agostino. He recommends buying RIM after the quarterly results on Thursday, "to avoid the guidance risk that currently overhangs the stock or alternatively look at out-of-the-money options." Mr. Agostino maintains a "buy" rating on RIM with a US$82 price target.

Source:financialpost