Research In Motion: What Happens After The Earnings Report?

Next Thursday, Research In Motion (RIMM) will report financial results for its fiscal first quarter ended in May. There’s a general belief belief on the Street that the company should at least hit the consensus, which calls for $4.35 billion in revenue and profits of $1.34 a share.

Guidance was for $4.25 billion to $4.45 billion in revenue, gross margin of 44.5%, profits of $1.31-$1.38, 11.2 million to 11.8 million units, 4.9 million to 5.2 million net customer adds and ASP in the $305-$310 range.

The real question is what happens beyond this quarter. As Nokia (NOK) vividly illustrated earlier this week, the balance of power in the handset business – and in smart phones in particular – is shifting away from the legacy players and toward Apple (AAPL) and Android. The question is whether RIMM can avoid the kind of wrenching market share loss that Nokia is now seeing – and which Sony Ericsson and Motorola, among others, had previously endured.

Here are two view of what the future holds:

The bull case: Caris & Co. analyst Robert Cihra today repeated his Buy rating and $95 price target on RIMM. He says the May quarter should be in line or better than the Street consensus, but adds that “the much bigger deal” for the company and the stock is the coming launch of the BlackBerry Bold 9800, also known as Talladega. The new phone will feature both a touch screen and a slide out keyboard, and will offer the first look at the new version of the company’s operating system software, BlackBerry OS 6.

Cihra notes that the OS has been rewritten for touch screens, and will include a brand new browser based on the same WebKit core that Chrome and Safari use. He thinks AT&T will make a big push for the new phone – which he thinks will show up in August – “perhaps positioning RIMM as a key defense in preparing for ultimate loss of iPhone exclusivity.”

Cihra thinks that investors have become too bearish on the company in the face of increased competition from Apple. “We think investors have written RIMM off in the face of exploding iPhone/Android competition, but think that’s expressly now the opportunity,” he writes. “Indeed, it it’s truly Apple vs. RIMM than we too choose AAPL, but we don’t think it has to be either/or, given the amount of legacy cell-phone market share we still see up for grabs by software-centric smartphones.”

The bear case: Citigroup analyst Jim Suva likewise thinks May quarter results will meet the consensus. But he also thinks that “the clock is ticking” on the company’s stranglehold on the enterprise. He says proprietary checks find rapid adoption of non-RIMM solutions in the enterprise, as a growing number of companies adopt a “bring your own device” approach, and “sandboxing,” with secure corporate software on employee-owned phones.

Suva says the pressure on the company in the enterprise increases the urgency for the company to offer more compelling consumer phones. But he says that the rapid adoption of Android phones is making that increasingly difficult. He says that RIMM’s market share of the North American smart phone market has dropped about 970 basis points to 41.4% since the launch of the Droid; the company’s market share is down from 55% in Q1 2009.

Suva thinks that when you put it all together, RIMM’s ASPs and margins are likely to come under structural pressure as the company ramps up spending in the consumer sector, “as Smart becomes Average.”

RIMM today is down 51 cents, or 0.8%, to $61.40.