RIM takes BlackBerry to China
TORONTO (Reuters) - Research In Motion Ltd (RIM.TO)(RIMM.O) has shipped the first of its BlackBerry smartphones to China and aims to start selling them later this year, a major breakthrough for the company in penetrating the huge Asian market.
RIM said on Tuesday it struck a Chinese distribution deal with Alcatel-Lucent (ALU.N). The first handset to be sold under the new partnership is the 8700 model, versions of which RIM has sold globally for several years.
"China and India are emerging mobile phone behemoths that could contribute millions of subscribers to RIM over the next several years," said Canaccord Adams analyst Peter Misek.
After the long-awaited announcement, investors drove RIM's shares to a record high. The stock jumped $11.15, or 9.8 percent, to close at $124.53 on the Nasdaq market. On the Toronto Stock Exchange, it rose C$9.12 to finish at C$120.42.
"I think it's a long-term positive," said Research Capital analyst Nick Agostino. "I don't see it as a near-term benefit as far as financials are concerned."
He said the BlackBerry is considered a premium service that will take time to gain traction among the big-business customers that RIM will target in China.
Even so, he added, the market there is so vast that even if RIM is able to capture just 1 percent of it, "it is certainly a lucrative opportunity for these guys."
The company has long recognized China's importance in its global plans and first officially announced plans to sell the BlackBerry there in May 2006.
"We look forward to building on the early interest and momentum we are experiencing in China with both multinational and domestic corporations," Jim Balsillie, RIM's co-chief executive, said in a statement.
Agostino said RIM has talked about wanting to enter China for three to four years.
The Waterloo, Ontario-based company already has a service partnership with China Mobile (0941.HK) for its entry into China, where it will face competition from low-cost rivals, including a popular local service called RedBerry.
Concern by Chinese authorities over communication network security could partly explain why RIM took as much time as it did to introduce the BlackBerry in the country, some market watchers said.
RIM's BlackBerry is already available from more than 300 carriers around the world.
Earlier this month, RIM said it had moved past the 10 million subscriber milestone and had shipped its 20 millionth handset.
It also said efforts to diversify its user base beyond the corporate sector were taking hold. For the first time, more than half of its new North American subscribers came from the "non-enterprise" market segment in the second quarter.
Alcatel-Lucent shares rose 43 cents, or 4.71 percent, to close at $9.55 on the New York Stock Exchange.
(Additional reporting by Ritsuko Ando in New York)
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