UPDATE 1-Citigroup cuts RIM citing Android attack
Nov 2 (Reuters) - Citigroup said the "Android attack" and promotion support from wireless carriers for Motorola's MOT.N soon-to-be-launched Droid smartphone would pose a challenge for Research in Motion (RIMM.O) (RIM.TO) and downgraded the BlackBerry maker's stock two notches to "sell."
The brokerage downgraded Research in Motion (RIM) from "buy" and also removed the stock from its Global Tech Conviction List and its Top Picks Live! list.
Citigroup said in a note to clients it expects carrier promotion spending supporting Blackberry products to slow and move to phones running Google Inc's (GOOG.O) Android platform, resulting in a lack of earnings-per-share leverage ahead.
The brokerage said 'buy/bring your own device' mobile phone programs are at the early adoption phase in enterprises and Apple's (AAPL.O) iPhone and Android phones, such as the Droid, are likely to accelerate this shift.
The brokerage upgraded Motorola to "buy" from "hold," saying the company is at the early part of benefitting from the promotion commotion, with carriers shifting promotion spending, sales person incentives and key hero product placement away from other handset companies towards Motorola.
The Droid, which will go on sale on Nov. 6 and cost $199 for people who commit to a 2-year service contract, is a massive bet for Motorola, which after losing market share to rivals for more than two years has reorganized its entire mobile business around developing Android phones. [nN28293728]
Motorola's "focused Android strategy coupled with very attractive hardware, appealing user interface and rapid carrier adoption drives average selling prices and sales above consensus expectations," Citigroup said. Citigroup also downgraded Palm Inc PALM.O to "sell" from "hold," saying it does not expect Palm to be acquired in the near term, but for the company to dedicate more resources to its web operating system platform with cost spending greater than anticipated.
RIM shares were trading down 5 percent at $55.90 Monday late morning on Nasdaq, while Motorola shares were up 4 percent at $8.95 on the New York Stock Exchange.
Palm shares were down 2 percent at $11.84 on Nasdaq.
(Reporting by Mary Meyase in Bangalore; Editing by Unnikrishnan Nair)
((mary.meyase@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: mary.meyase.reuters.com@reuters.net)) Keywords: RIM/RESEARCH CITIGROUP
(C) Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nBNG503802
- Tweet this
- Link this
- Share this
- Digg this
- Reprints
Follow Reuters