RIM shares tumble on renewed competitive concerns

TORONTO Fri Jun 25, 2010 4:19pm EDT

A BlackBerry smartphone user is pictured checking its Calendar in Washington, March 30, 2010. REUTERS/Stelios Varias

A BlackBerry smartphone user is pictured checking its Calendar in Washington, March 30, 2010.

Credit: Reuters/Stelios Varias

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TORONTO (Reuters) - Shares of Research in Motion closed down almost 11 percent on Friday, after the BlackBerry maker's quarterly results rekindled concerns about its declining North American market share and weaker profit margins.

Brokerages cut their price targets on RIM's shares and downgraded their ratings on the stock the morning after the company announced the results. The quarterly report included BlackBerry shipment figures that sparked renewed fears that the once iconic BlackBerry is losing ground to Apple Inc and other rivals.

Shares of the Waterloo, Ontario-based company closed down $6.35 at $52.23 on the New York Stock Exchange, even though the company had reported earnings that topped expectations and dangled more information about products in the pipeline.

While RIM promised to launch two high-end devices in the current quarter -- which are likely to boost shipments and lift its average selling price -- some analysts feared that it might be a case of too little, too late.

"Based on our store visit findings and product road maps, we expect further share gains from Android-based devices, as well as the iPhone," said Baird analyst William Power, who lowered his rating on RIM to 'Neutral' from 'Outperform.'

Power was referring to phones powered by Google's Android operating system and Apple Inc's iPhone.

In a note to clients, Power said the launch of new BlackBerry devices may help RIM in the second half of calendar 2010, but he thinks it might be too late for RIM to regain momentum in the United States.

RIM has steadily ceded market share in the United States since early 2009, as it faces stiff competition from the wildly popular iPhone and devices based on the Android platform.

RIM's results on Thursday coincided with the global launch of the iPhone 4, some analysts believe sales of the device may topped 1 million on day one alone.

Earlier this week, U.S. carrier Verizon and Motorola unveiled the Droid X device that some analysts warn could further harm RIM's market share in the United States.

"With the popularity of the iPhone ... The Droid X launch and other Android smartphones flooding the market, we believe RIM will find it increasingly difficult to differentiate its smartphones," said Raymond James analyst Steven Li, in a note to clients.

NEW LAUNCHES

RIM Co-Chief Executive Jim Balsillie, on a conference call, told investors to expect "hero campaigns," "beautiful innovation," and "turbochargers" in the second half of 2010, but he shied away from providing any concrete details.

BlackBerry aficionados are hoping that RIM will launch the highly anticipated BlackBerry 9800 in the current quarter. The touchscreen device is said to have a full slide-out keyboard, along with a new operating system and revamped Web browser.

The device could help turn the tide for RIM in North America, but the company was vague about exact launch dates, stating merely that the product launches will occur in its fiscal second-quarter that ends in August.

Investors hope the launches this summer will help RIM cash in on the back-to-school season and the holiday season at the end of the year.

In a note to clients, RBC Capital Markets analyst Mike Abramsky used the words sung by the character Eliza Doolittle in "My Fair Lady," to drive home his point.

"Sing me no song! Read me no rhyme! Don't waste my time, Show me!"

(Reporting by Euan Rocha; Editing by Frank McGurty)

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