RIM Profit View Lowered at Barclays

Barclays Capital has cut its profit estimates of BlackBerry maker Research In Motion (NASDAQ: RIMM), saying that low-end strength and aging products should lower average selling price (ASP).

The brokerage lowered its first quarter profit forecast to $1.64 a share from $1.67 a share. Wall Street expects the company to report earnings of $1.64 a share, according to analysts polled by Thomson Reuters.

We believe RIM's aging product roster will blemish results until RIM's product refresh in mid 2011, analyst Jeff Kvaal wrote in a note to clients.

We believe Curve 8520 ASPs are now near $200. We do not expect new products to hit results until fiscal second quarter thus lower our ASPs to $295 in first quarter from $310. Given a late March launch as initially planned, our first quarter Playbook estimate remains a modest about 270K, Kvaal said.

However, the analyst maintained his fiscal 2011 and 2012 estimates at $6.32 and $6.75 a share, respectively. But, he warned that the estimates may prove conservative as he assumes RIM's 40 percent growth slows to 15 percent.

Analysts expect earnings of $6.32 a share for fiscal 2011 and $6.71 a share for fiscal 2012.

Nevertheless, we believe RIM's 9 time price-to-earnings multiple is inconsistent with its impressive growth, modest estimates, and improving product, the analyst said.

Kvaal has an overweight rating and $85 price target on RIM stock.

RIM is expected to report its fourth-quarter results on March 24. Wall Street expects earnings of $1.75 a share on revenue of $5.64 billion for the fourth quarter.

Shares of RIM closed Tuesday's regular trading session at $64.78 on Nasdaq.