April 18, 2007 / 12:15 PM / 13 years ago

RIM gets N.America BlackBerry email working again

TORONTO (Reuters) - Research In Motion Ltd. said on Wednesday that its BlackBerry service had been mostly restored after an overnight outage that left many of its North American customers without wireless email.

Blackberry devices are used in Los Angeles March 3, 2006. A system failure at Research In Motion <RIM.TO> <RIMM.O> has affected Blackberry users in the Western Hemisphere, a news channel reported on its Web site late on Tuesday. REUTERS/Mario Anzuoni

The company said it was reviewing the root cause of the disruption, which began on Tuesday night, and was “closely monitoring systems to maintain normal service levels.”

RIM, based in Waterloo, Ontario, gave no details on what caused the problem. It said email service was “delayed or intermittent,” but phone calls were not disrupted.

The market sold the stock, then bought it back. But at least one analyst pondered if RIM’s infrastructure could keep up with the torrid pace of its subscriber growth.

RIM has about 8 million subscribers who use various models of its ubiquitous BlackBerry, and the United States is its biggest market. The device has become a staple with lawyers, politicians, company executives and other professionals, but has yet to reach similar consumer-market popularity.

RIM’s often-volatile shares, which regularly lose or gain between 1 and 3 percent in a session, were up $2.54 at $133.81 on Nasdaq, recovering from a drop soon after the market opened. On the Toronto Stock Exchange, they rose C$2.08 to C$150.90.

Nick Agostino, an analyst at Research Capital in Toronto, said RIM has a strong track record of stable service, and those who would call the disruption a black eye for the company are “just overblowing the whole situation.”

He noted European service wasn’t affected and said service interruptions have been very rare.

“This sort of stuff is expected,” Agostino said. “Obviously you don’t want it to be frequent.”

Carmi Levy, senior research analyst with Info-Tech Research Group, said the outage will have no long-term impact for investors, but would “illustrate a technical issue that the company does need to deal with.”

“They need to look at their architecture long-term and they need to ask some very hard questions about whether their current network is strong enough and big enough to support the kind of subscriber growth that they’re seeking,” he said.

The service problems forced users to cope without on-the-go e-mail access, but some also saw a silver lining — a chance to watch sports.

“I was trying to conduct business with my BlackBerry last evening, but once I realized it didn’t work I could sit down and enjoy the Rangers game and the Mets game,” said William Hickey, co-head of investment banking at Sandler O’Neill & Partners in New York.

RIM, a stock market darling which has won rave reviews for its device lineup, added 1.02 million BlackBerry subscribers in the fourth quarter alone, and expects to add another 1.125 million to 1.15 million in the quarter to June 2.

But there have been stumbles too, and RIM said this month it is now facing a formal investigation by the U.S. Securities and Exchange Commission over historical stock-option grants. The SEC earlier had been conducting an informal inquiry.

Investors also dumped its shares after fourth-quarter results which met, but didn’t exceed, expectations.

RIM is still working to get its financial filings up to date following a $250 million earnings restatement related to mistakes in how it granted stock options in the past. Jim Balsillie, the company’s co-CEO, gave up his dual role as the company’s chairman when the restatement was disclosed.

(Additional reporting by Mark McSherry in New York)

$1=$1.13 Canadian

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