RIMM: Citi Repeats List of Reasons It Can Get Worse

Citigroup’s Jim Suva this evening in a note to clients reiterates a Sell rating on shares of Research in Motion (RIMM), under the heading “it’s going to get worse.”

Where have I heard that phrase before with respect to RIM�?

Ah, yes, Suva penned something similar back on December 9th, so today’s note is something of an update.

Suva writes that he is “surprised” RIM hasn’t yet warned about the fiscal Q4 that ended last month, given “the outlook provided last quarter was substantially below expectations.”

(RIM reports Q4 results next Thursday, March 29th.)

For Q4, he’s modeled $4.56 billion in revenue on sales of 11.4 million BlackBerry units and 241,000 PlayBook tablet computers, and 83 cents a share in profit. That’s below RIM’s guidance for $4.6 billion to $4.9 billion in revenue, 11 to 12 million units, and 80 cents to 95 cents per share in profit. Suva is, however, roughly in line with consensus.

For the May-ending fiscal Q1, he’s modeling $4.44 billion and 69 cents a share.

As far as what could go wrong, like last time, Suva has a 10-point checklist, most of which are a repeat of what Suva wrote in December:

1. RIM’s delay of BB10 handsets may mean it can’t get carrier certification of the devices by July or early August, which in turn means…
2. RIM may not have much to offer for the back-to-school season;
3. The company has to continue to support the PlayBook despite low sales because its “QNX” operating system is the foundation from which BB10 programming will develop;
4. RIM is missing out on stealing business from Nokia’s (NOK) traditional phone market;
5. Apple’s (AAPL) iPhone 4S is more of a threat to RIM overseas than the prior model because it’s a “world phone”;
6. RIM is losing shelf space and carrier support;
7. High-margin monthly service fees in North America are eroding;
8. The company is cutting staff just when it needs to beef up for product development;
9. RIM’s growth rate is set to be half the industry growth rate;
10. The move to consumer-friendly “bring your own device” policies in companies is just starting to erode RIM’s enterprise position and could start to impact the company’s net subscriber count.

About all of that, Suva concludes:

If we are correct with our view that future EPS continues to move lower as time progresses that would imply target prices continue to move lower as time progresses. We’ve seen this movie before (Motorola, Nokia, Sony-Ericsson, LG, Palm) as the history of wireless is littered with OEMs that had significant product cycle/share gains, but then missed structural market shifts. Bottom line, we believe RIMM has no short-term fixes to improve product portfolio, brand perception, to reinvigorate share gains, revenue growth & profitability.

RIM shares today fell 26 cents, or 1.9%, to $13.78.

Fin