Needham Cuts RIM Rating on iPhone Threat

Needham’s Charlie Wolf this morning cut his rating on Research In Motion (RIMM) to Underperform from Hold and cut his estimates on the company to reflect the growing threat from explosive sales of the Apple (AAPL) iPhone 3G.

“Sales of Apple’s iPhone 3G appear poised to blow through everyone’s forecasts,” Wolf wrote in a research note this morning. “While RIM’s dominance of the enterprise market appears secure, at least for now, the company’s great growth driver—the consumer market—is bound to come under siege because of the iPhone.”

Wolf notes that the Blackberry Pearl has allowed the company to “dramatically” increase its consumer sales, but he asserts that the company’s success has stemmed from a lack of competitive offerings. “That ended on July 11 with the introduction of the iPhone 3G,” he writes. “Apple and RIMM are not engaged in a zero-sum game. Nonetheless, the iPhone is bound to cut into Blackberry’s incredible growth in the consumer smartphone market.”

Wolf says RIMM will counter with “new iPhone look-a-likes.” He says those models “have no hope of matching the secret sauce of the iPhone—the tight integration of hardware and software that creates a unique user experience. Nor do they have any chance of evolving into an application development platform like the iPhone.”

He cut his 2008 EPS estimate to $3.70 from $4.05; for 2009 he goes to $4.80 from $6.25. He puts fair value on the stock at $87.

Comments

[mollytjm]

there's room for a lot of players in the tech market, but the best innovators with the most $ for back up will do the best...and that's Apple. everyone knows good companies can take a beating in a bad market...but Apple remains a good long term investment because they understand timelines and how to stay ahead of the pack.