UPDATE 1-RIM shares drop after broker report on sales

Mon Oct 20, 2008 2:30pm EDT

(Adds analysts' quotes, details)

TORONTO Oct 20 (Reuters) - Research In Motion RIM.TO RIMM.O shares dropped as much as 10 percent on Monday after a brokerage report said that retail sales trends for BlackBerry smartphones in North America and Western Europe have been "slightly disappointing".

In a note issued on Monday, Pacific Crest Securities analyst James Faucette said so called "sell-through" trends throughout the middle of October have been slightly disappointing.

It also said risks to November-quarter results are building as the company is becoming more reliant on "aggressive and successful" launches of its BlackBerry Storm and BlackBerry Bold models in the United States.

The Storm and Bold are not yet available in the United States, Faucette added.

RIM shares were down 7.1 percent to C$65.26 on the Toronto Stock Exchange on Monday afternoon, after earlier dipping as low as C$63.25, or down 9.96 percent.

"People are ratcheting back their expectations for earnings," said Peter Misek, analyst at Canaccord Adams. "It's a pretty direct relationship when you see consensus estimates come down."

As well, early sales of the BlackBerry Pearl Flip have been tepid at best and sales execution problems in Canada and Britain are plaguing Curve and Bold sales, said Pacific Crest Securities.

However, Paradigm analyst Barry Richards said it's too early to make any assessment of what will happen to RIM's results.

"With the Bold, the Flip and the Storm all set to ramp in the back half of October and through November it is too early to make any assessment of the potential for Q3 or Q4 results," Richards wrote in a midday note. ($1=$1.19 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)

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