RIMM Q1 Revenue & EPS Guidance

RIMM - Q1 Guidance

Q1 2011 Revenue Estimate:  $4,364,291 

                     EPS Estimate:  $1.29

                     Gross Margin:  43.4%

INCOME STATEMENT
Three Months Ended May 29, 2010
Revenue	$4,364,291
Cost of Sales	$2,471,183
Gross Margin	$1,893,108
	43.4%
Operating Expenses:
R&D	$271,536
SG&A	$569,424
Amortization	$89,092
Total	$930,052
Income from Operations	$963,056
Investment Income	$8,697
Income before Taxes	$971,752
Provision for Income Taxes	$254,151
Net Income	$717,601
EPS
Basic	$1.29

Given the slightly cyclical nature of RIMM’s business, the first quarter of the 2011 fiscal year is reduced by its seasonal index of .938.  Gross Margin is slightly lower than the Q4 estimate as a result of higher costs for the quarter.  This trend is further evidenced by a higher SG&A estimate in comparison to Q4 predictions. 

Once the fourth quarter results hit the wires Wednesday afternoon, I will be able to retune the statistical models to better forecast Q1, 2011 results. 

*On a side note, remember that RIMM does not follow a traditional calendar-year reporting cycle.  Instead, their fiscal 2011 year actually began on March 1^st, 2010.  Don’t get confused when I start talking about estimates for “Q1” when we are about to begin the month of April!  

Below I’ve included all four seasonal indexes for the year that I use throughout my estimates.  I also added an aesthetically pleasing income statement that compares Wednesday’s earnings predictions (Q4) with next quarter’s estimates (Q1).   

Seasonal Indexes
Q1	Q2	Q3	Q4
0.938458	1.130057	0.970877	0.960608

  

INCOME STATEMENT
Three Months Ended May 29, 2010
	This Quarter	Next Quarter
Revenue	$4,354,493	$4,364,291
Cost of Sales	$2,422,842	$2,471,183
Gross Margin	$1,931,651	$1,893,108
	44.4%	43.4%
Operating Expenses:
R&D	$271,471	$271,536
SG&A	$554,904	$569,424
Amortization	$85,274	$89,092
Total	$911,648	$930,052
Income from Operations	$1,020,003	$963,056
Investment Income	$6,532	$8,697
Income before Taxes	$1,026,535	$971,752
Provision for Income Taxes	$283,042	$254,151
Net Income	$743,493	$717,601
EPS
Basic	$1.34	$1.29

Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.