RIMM – Reports better than expected results, but still a sequential slowdown with no new products until Q1 2013.

Revenues, EPS, units, cash flow, and subscribers all better than expected (or feared) this quarter.  This have caused a major after hours spike in the shares as short are forced to cover and opportunistic buyers and value buyers reach for shares.  We have three questions:

1) Was there a material change in the companies trajectory? No, sequentially unit sales still fell, US continues to decline – which puts enterprise ever more at risk.  FCF was still negative, and no new products until Q1 2013.  While we somewhat agree with the need to focus on development of a better phone, all their action is at the mid to low end.  Developing a high end phone with schedule mid and lower tier phones by next fall seems amazingly strange and likely not to work.

2) Were there any updates regarding new products or revenue opportunities?  Not really, one small one relating to licencing.  CEO mentioned positive meetings with other CEOs who said meetings are “very productive” and that RIMM needs to remain a “relevant player in the mobile computing world.”  Fair enough, EVERYONE wants a third player, but that is just lip service at this point.

3) Is there value in the sum-of-the-parts analysis? subjective based on valuation for service business and IP value, but likely higher than $4b in a takeout – assuming an actual takeout, of course.

Bottom line, we continue to see RIMM as a damaged brand and one that is pushing too hard, too late.  They are still fighting the last war – surviving by the scraps left over by Nokia.  Lower cost Android and Chinese made phones will hurt their share in Q4 and 2013.  The shares may certainly rise on short covering and momentum buying – we recommend avoiding the temptation.