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Old 11-02-2005, 03:07 PM   #1 (permalink)
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Default [2005-11-02] Merrill Lynch gives RIM a 'buy' rating

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Merrill Lynch resumes coverage of RIM with buy rating and $85-US price target

TORONTO (CP) - Investment firm Merrill Lynch resumed coverage of Research In Motion on Wednesday with a "buy" rating and an $85-US price target citing recent weakness in the stock as a buying opportunity.

"Our core investment thesis is that RIM will continue to play a major and profitable role in the fast growing market for wireless data devices and services, which is still in its early stages," analyst Vivek Arya wrote in a note to clients.

"Unlike consensus, we do not believe its a zero-sum game. RIM and its competitors can all benefit, albeit in different market segments. The key difference is RIM's record of execution versus only headlines and imitations thus far from competitors."

RIM shares (TSX:RIM) have been under pressure in recent weeks after several setbacks in U.S. courts in its patent dispute with NTP, a Virginia holding company formed to defend patents of Thomas Campagna who died in 2004.

Shares in the company were up $1.08 at $72.13 on the Toronto Stock Exchange on Wednesday. The shares were up 73 cents at $61.25 US on the Nasdaq market.

The stock hit a 17-month low last week after the U.S. Supreme Court denied a request to stay lower-court proceedings in a patent dispute that threatens sales of the BlackBerry handheld e-mail device.

Lawyers for RIM had argued its business would be harmed irreparably if the Supreme Court did not delay the case's return to the U.S. district court in Virginia, where the company was found guilty in 2003 of violating patents held by NTP Inc.

The Canadian company said it expects NTP will ask the U.S. district court to ban the sale of the BlackBerry in the United States but RIM also said it expects the district court will also address other issues involved in the dispute.

The main issues are a $450-million-US tentative deal announced by RIM and NTP on March 16, findings of a Patent Office re-examination of the NTP patents, and an Aug. 2 ruling by the Federal Circuit appeals court.

Merrill Lynch suggested that with most legal routes exhausted, RIM could be closer to a settlement with NTP.

"In our view the shares reflect an excessive $9-billion 'fear factor' attributed to a possible settlement with NTP, growth slowdown and other factors," Arya wrote.

"While the ongoing patent case continues to be a material risk, our detailed sensitivity analysts indicates a less than 10 per cent earnings per share impact for a conservative settlement range."
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Old 11-02-2005, 04:00 PM   #2 (permalink)
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The person who wrote this article must be a recent grad or is still an Intern who has no clue what they are talking about.
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Old 11-02-2005, 04:02 PM   #3 (permalink)
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they probably have a bunch of stock they want to upload - the old pump and dump....
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Old 11-02-2005, 04:16 PM   #4 (permalink)
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Wirelessly posted (BlackBerry 7520: Mozilla/4.0 (compatible; MSIE 6.0; Windows NT 5.0) BlackBerry7520/4.0.2 Profile/MIDP-2.0 Configuration/CLDC-1.1)

Get a clue guys. RIM board recently authorized a repurchase program. They are not aggressively fighting the bad news, waiting for price to hit bottom for buyback, then will prob settle with NTP. This one will be on fire soon.
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Old 11-02-2005, 09:16 PM   #5 (permalink)
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Quote:
Originally Posted by ace_2005
The person who wrote this article must be a recent grad or is still an Intern who has no clue what they are talking about.
so they are referring to mostly quotes made by Merrill Lynch investment analysts, and you seem to think that they are less inclined to the financial market than someone such as yourself, a junior level technical or possibly sales employee for a rival competitor of RIM who faked his own employment as a BES administrator to a company that did not exist all for the purposes of promoting your own company's wireless push mail product...?

gotcha.
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Old 11-03-2005, 08:32 AM   #6 (permalink)
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my comments were meant tongue in cheek. I do not really believe ML run a pump and dump operation.

However, my real view on RIMM is this. Like most market/stock prices a component of the price has to do with existing business model and some forward looking speculative component.

So, the question is has the current stock price already got factored into it the fact that RIM is launching a series of new models and expects to get a revenue (and margin) bump from that - probably yes.

The next question is about NTP. We see that the pending legal issues are having some effect on the stock (price drops last week) but do we really believe this issue is not going to get resolved, or resolved in some negative to RIM way? - I think not. At the end of the day all this is just posturing around how much RIM feels it is going to have to pay to make this all go away. - so, long and the short of this is that, for right now, the stock has some negative drag on the price that will go away once this issue is resolved.

Next issue is adoption by other platforms of RIM s/w. This will increase once the litigation issues are resolved - this should add some additional positive uptick in the price.

Next issue is MicroSoft and their competing technology. This will be hard to compete against, even if RIM technology is better, Microsoft will take some of the market share just because they are Microsoft - how much marketshare is for Microsoft to try hard to gain while RIM tries hard to block - should see some interesting dynamics playing out in this space.

So, in summary, I think the stock has some play upwards. I would imagine the expected upswing of revenue from new products is already factored in the current price of the stock so if they don't sell well the revenues will fall short of expectations and the price could drop a bit.

I think once the litigation issues are resolved then the only real issues facing RIM is a marketshare fight against Microsoft.

Long and the short of it - stock should increase from current position over next six months if all of the above pans out for RIM.

Now, I'm not an analyst. These are only my own thoughts. Do not use my thoughts as your sole guide to buying this stock. These are just my thoughts on the situation.
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