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RIM reality check

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While many of us pile on Research in Motion's (RIM-T) dismal quarter, perhaps we should look back on what analysts have been telling us for the past few months.

Fifteen analysts hurriedly pumped out reports on Friday -- just one day after RIM announced the delay of phones running its BlackBerry 10 operating system and 5,000 job cuts -- and slashed their ratings and/or target prices.

But what were they saying one year ago? Remember, the target price is supposed to be what the analysts think the price WILL be 52 weeks from now?

Let’s look back:

Of the 47 analysts who cover RIM, the average price target one year ago was…$36. That means those analysts thought that the price today, in June 2012, would be $36. As we know, they were mostly all wrong.

There were only two (yes…just two) analysts that were even remotely close in terms of their rating or price target -- and yes, I am excluding all those analysts who had a low target, but had “holds” all the way down as the stock slid from $40 to $7.50.

They were, according to Bloomberg:

1.) Sergio Zafra at Compania de Professionales de Bolsa in Bogota, Colombia. He rated RIM only once: a “sell” on January 25, 2012 and a $14.11 price target.

2.) James Cordwell at Atlantic Equities in London, U.K. who rated RIM “underweight” with a target of $11.14.

Note: Both these analysts are far, far away from North America (and any investment banking business that may emanate from the Waterloo area). I give those two analysts a “B” grade.

How did the other analysts do? They mostly followed RIM’s price slide, with some “buys” and “holds” on the way down. They all get an “F”.

In fairness, analysts have said management wasn’t straight with them. I sympathize. On January 23, 2012, I interviewed then incoming CEO Thosten Heins and asked him point blank, “Will there be any job cuts?” He said “no”. He went on to say they were still hiring. (You can watch the interview above). There isn’t room for much interpretation on that answer. But, it’s the analysts’ job to see through what management is saying and make the hard call sooner rather than later.

And watching what is happening to a Canadian pioneer like Research in Motion…is a hard call.

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