Research In Motion Ltd. (RIMM) recently announced the acquisition of Paratek Microwave, Inc. for an undisclosed amount. The acquisition will help the company to offer mobile phones to its customers that reduces battery consumption as well as enhances the quality of incoming and outgoing calls. Additionally, it will also benefit the company to offer single handsets supporting different band of spectrums.
Paratek Microwave, Inc. designs and manufactures adaptive radio frequency front-end component solutions for mobile wireless applications for multi-mode and multi-band operations. The company also possesses a technology called ParaScan, which can vary its capacity with voltage fluctuations to adapt to different bands.
Recently, the company launched PlayBook operating system 2.0, which we believe will boost its tablet sales in the near term.
Currently, Research In Motion is developing super-fast Long Term Evolution (LTE) network based BlackBerry, which will run on QNX operating system. LTE is an emerging technology and is gaining popularity across the world including the U.S.
An early launch of innovative LTE-capable smartphone may enable the company to regain lost ground going forward. Moreover, solid subscriber growth, strong share repurchase plan and increased smartphone sales will drive the top-line growth going forward.
However, woes continue for the company as it continues to loose market share owing to stiff competition from Apple Inc.‘s (AAPL) tablets and newly released iPhone 4S that has already garnered huge demand during this holiday season. Concurrently, Research In Motion has reduced its fourth quarter financial outlook, hence raising the concern of the investors.
Recently, Research In Motion also slashed its tablet prices in order to clear its inventory backlog. Additionally, the company has delayed the launch of its new QNX-based smartphones, which was slated to release in the first quarter of 2012. These combined factors will further put pressure on the company’s margins and EPS going forward.
We maintain our long-term Neutral recommendation for Research In Motion Ltd. Currently, Research In Motion Ltd has a Zacks #3 Rank, implying a short-term Hold rating.
Research In Motion Ltd., headquartered in Waterloo, Ontario (Canada), designs, manufactures, and sells wireless solutions to the mobile communications market.
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