RIMM 4th Quarter 2010 Earnings Forecast

RIMM - Research in Motion 
Q4 2010 Revenue Estimate:  $4,354,493
                     EPS Estimate:  $1.34
                     Gross Margin:  44.4%

INCOME STATEMENT Three Months Ended February 27, 2010 Revenue $4,354,493 Cost of Sales $2,422,842 Gross Margin $1,931,651 Operating Expenses:    R&D $271,471    SG&A $554,904    Amortization $85,274      Total $911,648 Income from Operations $1,020,003 Investment Income $6,532 Income before Taxes $1,026,535 Provision for Income Taxes $283,042 Net Income $743,493 EPS    Basic w/ share repurchase $1.34

The following is just a hint at the process undertaken to arrive at the above estimates:

In order to arrive at the Q4 Revenue estimate, 10 different regression models with differing lengths of data were tested to determine which model best predicted Q3 2009 sales.  This included the following types of regression, to name a few: Dummy Coding, First-Order Linear, Exponential, Deseasonal, and Lagged Auto Regression.  After evaluating the accuracies of the various predictions using the below table, I decided to use a combination of Deseasonal and Lagged Auto Regression. 

Accuracy
Model	Prediction	Percent Err.	W/ St. Err.	Percent Err.	R^2	Ad R^2
First-Order	$3,135,929	20.1%	$3,566,992	9.1%	86.05%	85.41%
Exponential	$4,734,462	-20.6%	-	-	98.60%	-
Deasonal	$2,979,105	24.1%	$3,451,442	12.0%	83.71%	83.03%
Dummy	$2,959,679	24.6%	$3,441,444	12.3%	84.69%	81.77%
Lagged	$4,198,463	-7.0%	$4,418,114	-12.6%	96.56%	96.20%
First-Order 2	$3,455,571	11.9%	$3,803,549	3.1%	90.92%	90.38%
Exponential 2	$4,572,049	-16.5%	-	-	98.60%	-
Deasonal 2	$3,400,009	13.4%	$3,783,254	3.6%	89.55%	88.94%
Dummy 2	$3,373,129	14.0%	$3,749,819	4.4%	91.23%	88.73%
Lagged 2	$4,063,633	-3.6%	$4,234,519	-7.9%	97.91%	97.56%
		Actual Nov-2009 Sales
		$3,924,310

Current consensus puts EPS at $1.28.  If the $1.34 prediction is correct, this could result in considerable upside for the stock. 

RIMM Ownership

Author:   NO

Author’s Family:  NO

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.