TORONTO The forecasts will be key for BlackBerry maker Research In Motion this quarter, as investors grope for hints that the company's long downturn is coming to an end.
Predictions of sharply higher-than-expected profits and stronger sales when the Canadian company reports results on Thursday could help ease the pain caused by launch delays, poorly-received products and tough global competition.
But its new phones, touchscreen devices aimed to narrow the popularity gap with Apple's iPhone and phones using Google's Android software, are only a stop-gap move for the company, which has cut jobs and is fending off shareholder requests for management change.
"RIM is being progressively effaced from the North American handset market," Bernstein analyst Pierre Ferragu wrote in a note that said RIM's declining U.S. market offered a clue to its fate in other markets. "The window of opportunity for RIM to fix its product portfolio is most likely gone."
RIM, once a byword for corporate communication, warned in April that weak sales of its aged BlackBerry portfolio were hurting its prospects.
In June it slashed its forecasts again, even as it sought to reassure investors with longer-term plans for a software overhaul and short-term product upgrades. It said it would cut 11 percent of its workforce.
In a bid to keep customers loyal, RIM released a raft of devices in the last weeks of the quarter, which ended on August 27. Its shares have since rallied from an early-August five-year low of $21.87 on optimism about the new smartphones, which have mostly been well-received.
The shares were at $29.92 on Tuesday, up 37 percent from that low but still down 50 percent since the start of the year.
"People are going to be most interested in what RIM looks like having shipped those products for a full quarter," CIBC World Markets analyst Todd Coupland said. "So that'll be Q3, which is a seasonally stronger period as well."
Analysts on average expect RIM to have shipped less than 12 million BlackBerrys in the second quarter for its second consecutive quarterly decline. They see that rising to over 14 million in the current quarter as the new devices sell.
The new phones use an updated version of RIM's existing operating system as the company tries to migrate its smartphones onto the QNX-based software that powers its poorly received PlayBook tablet computer, launched in April.
Time is not on RIM's side, as Microsoft and Nokia prepare to launch the first results of their tie-up and Android handset makers flood the lower end of the market with cheaper devices.
"I think people are looking at RIM in a fairly compressed timeframe, given all the competition that's out there," Coupland said. "I think their guidance for annual EPS has long since been dismissed."
RIM currently forecasts earnings per share of $5.25-$6 for its 2012 fiscal year - which ends in early March. Analysts on average expect $5.10, doubting RIM can make up for a dearth of new products early in the year.
The PlayBook tablet seems to have slipped down the list of analysts' priorities.
"RIM has been slow in making the necessary upgrades for the Playbook to be fully competitive," said BMO Capital Markets analyst Tim Long. "While we like the hardware, we need to see these enhancements."
Most analysts expect RIM to have shipped far less than one million PlayBooks in the second quarter as Apple's iPad keeps its chokehold on the market. It shipped 500,000 in its first quarter of business.
For the second quarter, analysts on average expect RIM to earn 87 cents a share on revenue of $4.47 billion, according to Thomson Reuters I/B/E/S. That's down sharply from $1.33 a share last quarter and $1.46 a year ago, and below the midpoint of the company's own forecast range.
Analysts' forecasts for the third quarter are stronger - earnings of $1.36 a share on $5.27 billion in revenues.
(Reporting by Alastair Sharp; editing by Janet Guttsman)