UPDATE 2-RIM stock surges as competition worries recede

Mon Mar 8, 2010 4:06pm EST

* Stock up 6.3 pct on Nasdaq; 6 pct in Toronto

* Fears of Apple, Motorola competition seen overblown

* BMO raises Q4, 2011, 2012 earnings estimates

* Fourth-quarter earnings due out March 31 (Recasts with analyst's comments, background. In U.S. dollars unless noted)

By Nicole Mordant

VANCOUVER, March 8 (Reuters) - Shares of Research In Motion RIM.TO RIMM.O leaped more than 6 percent on Monday as a tide of worry about competitive threats that had engulfed the BlackBerry smartphone maker started to recede.

Concerns that the likes of iPhone maker Apple Inc (AAPL.O) will make quick and deep inroads into RIM's markets are overblown, said BMO Capital Markets analyst Tim Long in a report in which he raised his earnings estimates, share-price target and recommendation on the Waterloo, Ontario-based company.

Several other analysts agreed, helping to lift the stock to a 5-1/2 month high and marking a turnaround from the many reports on RIM's woes in the past six months.

"Sometimes it takes just one report from an analyst to change the tide. That (Long's) report validates what a lot of people had suspected but did not have evidence of," said Carmi Levy, an independent technology analyst.

Long said RIM should be able to easily beat market expectations for fourth-quarter results on March 31 on the back of strong sales in all regions led by the company's BlackBerry Bold and Curve smartphones.

"Competition that we were expecting now seems further away, including a CDMA iPhone, giving RIM the ability to further grab share in the smartphone segment," he said in a note to clients.

Other smartphone makers, including Apple and Droid manufacturer Motorola Inc MOT.N, have reported results in recent weeks that don't show them making making a dent in RIM's franchise, Paradigm Capital analyst Barry Richards said.

"The market has painted a picture of increasing competition, which doesn't seem to be true. The numbers support the view that RIM is gaining share and continuing to do well," Richards said.

RIM's stock jumped as high as $73.87 on Nasdaq in brisk volume, a gain of $4.37, or 6.3 percent. In Toronto, the stock rose 6 percent to C$75.88.

BMO's Long raised his fourth-quarter earnings estimate for RIM to $1.32 a share from $1.28. That is ahead of analysts' average forecasts for $1.27 for the quarter, according to Thomson Reuters I/B/E/S.

Long also raised his full-year 2011 and 2012 estimates, and upped his share price target to $88 from $70. He raised his rating on RIM stock to "outperform" from "market perform".

Despite Monday's surge, RIM's stock still hasn't recovered from a 17 percent slump last September, when it issued a disappointing outlook that led analysts to cut forecasts.

While the market has worried about RIM losing market share, the company has been waging an aggressive push into the mainstream consumer market to diversify beyond its base of business and professional customers, who use the BlackBerry for secure wireless email service.

The market has been largely divided into two camps on RIM, with one seeing the company punished by its competitors, said DSAM Consulting analyst Duncan Stewart. The other believes there is so much expansion potential in the smartphone market as consumers swap cellphones for the feature-rich mobile devices that there is space for everyone.

"That seems to be the one coming true," said Stewart, who predicts the global smartphone market expanding from 200 million units a year now to 500 million in two to three years time.

($1=$1.03 Canadian) (Reporting by Nicole Mordant; editing by Peter Galloway)

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