RIM: Remember, They’re Still Profitable, Says Morgan Keegan

As analysts continue to asses Research in Motion’s (RIMM) fiscal Q3 warning and PlayBook tablet computer price chopping announcement this morning, and some warn of more downside, others are pointing to the fact the company is still profitable — for the moment.

RIM made $6.34 per share last year, though it will clearly be much less than that this year, somewhere between $4 and $5, a drop of perhaps 30% to 40% in earnings.

Tavis McCourt with Morgan Keegan is a little more upbeat than most on this matter.

Today he reiterates a Market Perform rating, while lowering his price target to $18 from $19.

$18 is, in fact, what he expects book value for the company to be in a year’s time, given that earnings are declining. However, with 14 million units sold last quarter, the company still has “a long way to go” before they become unprofitable, even though the shares are now trading as “in liquidation.”

“We estimate that RIM need only sell ~4 mm handsets/quarter to break even,” writes McCourt, “although long term, a sub base of 45mm+ and shipments of 7mm+/qtr is needed for viability at the current cost structure (in our opinion).”

McCourt cut his 2012 EPS view to $4.24 from a prior $4.42, and cut his 2013 view to $3.35 from a prior $3.56.

Update: In a similarly charitable note, ThinkEquity’s Mark McKechnie, who rates RIMM Market Perform, offers that the company’s network operations center, or NOC, which delivers service to more than 70 million subscribers, has value, though a dwindling value.

“We view RIMM’s NOC as a declining asset should it remain closed to RIMM hardware but could be stabilized should they open it to Apple, Android and Windows Phones,” he writes. McKechnie thinks RIM is, in fact, working on opening up the NOC, perhaps by the time it rolls out its BlackBerry devices based on “QNX” software. How much cooperation it will require, and will receive, from those competitors is unclear, he writes.

“We believe the assets could prove strategic to Amazon.com (AMZN), which has recently entered the tablet market but has no IP, or MSFT which also has limited IP and could benefit from RIMM’s strategic BES server/ NOC platform.”

Moreover, the company’s “Fusion” software for device management, announced this week, is not the answer, as it does not offer “the full-featured push e-mail functionality of the Blackberry platform.”

McKechnie cut his price target to $18 from $23, and cut his EPS outlook for this year to $4.27 from $4.50.