RIMM's Tablet Ready For Launch - Analyst Blog

Research In Motion Limited (RIMM) is all set to launch its new tablet computer as well as the operating system that will power it, next week.

The tablet computer is being built by Quanta Computer Inc of Taiwan and will run on chips from Marvell Technology Group Inc. (MRVL). The tablet will be based on a new operating system developed by QNX Software Systems. Research In Motion acquired QNX from Harman International in April 2010.

Research In Motion is using operating system from ONX for the tablet instead of its traditional BlackBerry’s operating system, which is slow, time consuming and outdated. Eventually, Research In Motion intends to transition its BlackBerry smartphones to this operating system.

The tablet will feature a seven-inch touch screen with a built-in camera and is expected to be released in the fourth quarter of calendar year 2010. It has Bluetooth and broadband connections that will allow connectivity to cellular networks through a Blackberry smartphone.

Recently, Research In Motion announced its second quarter 2011 earnings results, which beat the Zacks Consensus Estimate. EPS was $1.46, above the Zacks Consensus Estimate of $1.35. Total revenue was $4.62 billion, up 31% year over year.

During the quarter, Research In Motion added about 4.5 million new BlackBerry subscriber accounts, bringing the total subscriber account base to more than 50 million. It also shipped over 12 million BlackBerry smartphones in the quarter.

Despite solid results, Research In Motion’s share price continues to fall based on the decrease in net subscriber additions of 4.5 million, which were much below the company’s earlier guidance range of 4.9 – 5.2 million.

Research In Motion continues to face increasingly tough competition from Apple Inc.‘s (AAPL) iPhone as well as handsets that run on Google Inc.‘s (GOOG) Android operating system, such as Motorola Inc.’s (MOT) Droid phones. Hence, the company has been trying to lure software developers to create applications for its phones that will enable it to create a distinct niche for its products. Recently, Research In Motion also launched its new device Torch to beat competition.

Despite developing new devices to beat competition, the company continues to struggle in keeping pace with the various products flooded in the market. We believe the tablet will also have to compete with Apple’s iPad launched in April. Similar products are being developed by Korean electronics giant Samsung Electronics Co., Taiwan ‘s Acer Inc., Cisco Systems Inc. (CSCO)and Dell Inc. (DELL).

We maintain our long-term Neutral recommendation for Research In Motion. Currently, it is a short-term Zacks #3 Rank (Hold).