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RBC on RIM: ‘we were wrong’

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Research in Motion’s (RIM-T) steep downward revision in its profit outlook raises questions over its ability to meet its earnings forecast, a noted bullish analyst said in a research note.

RIM said on Thursday that it now expects earnings of $1.30 US to $1.37 US a share for the current quarter, which ends in late May—down from the $1.47 to $1.55 it forecast in March.

Mike Abramsky of RBC Securities, has lowered his target price to $55 from $90 because of the earnings revision.

“We were wrong, as mis-execution has undermined sentiment recovery,” Abramsky said in a note to clients, where he also lowered his Top Pick rating to Sector Perform.

“Our Sector Perform rating reflects our view that RIM shares will likely remain pressured pending improved investor visibility on the company’s earnings momentum.”

Abramsky also had harsh words for the company’s mishandling of the debut of its tablet device, the PlayBook.

“PlayBook is a promising Tablet contender, but RIM bears some responsibility for its less-than-favourable debut, confusion over its positioning and criticisms it was not fully ready for market,” he said.

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