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RIM subscribers, cash to be closely watched in Q3 ahead of BlackBerry launch

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WATERLOO, Ont. - Research In Motion will report third-quarter results Thursday, the last time the market will get a peek into RIM's financials before it releases its much anticipated new line of smartphones in the new year.

Analysts will closely be watching the company's cash volume and subscriber numbers after the BlackBerry-maker surprised in the last quarter with better-than-expected numbers on both fronts.

"We want to see their cash balance more or less unchanged quarter over quarter. They're going to need all that ammunition to promote the BlackBerry 10 globally when they launch it," said National Bank analyst Kris Thompson.

On Jan. 30, the company (TSX:RIM) will unveil a new line of smartphones running its latest operating system as it enters the most important months of its history, ones that will likely determine whether RIM survives in its existing form.

RIM has already said it expects to report an operating loss in the third quarter as it works through the transition to its next generation of BlackBerry smartphones and completes its cost reduction plan.

Thompson said he expects to see subscribers fall by about a million, but noted a surprise in that area could happen again.

In the second quarter, RIM said it had 80 million subscribers at the end of the quarter, an increase of about 2 million from the previous three months.

"I modelled down a million last quarter too and (I was) wrong. They're discounting the units aggressively, they're blowing out their inventory, so I wouldn't be too surprised to actually see them grow that subscriber base again. If they can do that and maintain their cash, the stock is going higher," Thompson said.

With the company heading into uncertain territory in the new year, RIM's stock price has traded erratically.

Since falling to its lowest level in about a decade in September, the company's shares have surged about 125 per cent, helped by a number of analyst upgrades.

Some analysts have noted that even though RIM has added new customers, many of them have been in emerging markets where lower priced phones are the norm. Cheaper phones don't add as much to the bottom line.

Also in its second quarter results, RIM said its cash reserves grew by $100 million to $2.3 billion as of Sept. 1. Analysts had been concerned that the company would have to dip into its savings to survive during this period before its new product launch.

Technology analyst Bill Kreher at Edward Jones said it's hard to forecast quarterly results going forward because although the launch date for the phones is set, customers do not yet know when they will be available. He is hoping the company will shed some light on that question and also reveal a price point.

"Any incremental information would be helpful," he said.

Richard Tse, an analyst at Cormark Securities, said the key thing he'll be focusing on is the company's outlook.

"I'm sure a lot of questions will be around the timing of BB10 and the extent that they can talk about that and give specifics."

This year, RIM has watched its market share in North America dramatically fall to about four per cent as the BlackBerry became an afterthought in the face of Apple's iPhone and the Samsung Galaxy S3.

And while other companies debuted new devices, RIM was forced to push the launch of its BlackBerry 10 operating system and new phones into next year, missing the crucial back-to-school and holiday shopping seasons.

The company has also made significant reductions across its operations, closing facilities, severing ties with certain manufacturers and announcing plans to lay off 5,000 workers across its global operations in an effort to save $1 billion by the end of its fiscal year.

Analysts are expecting a quarterly loss of 33 cents per share and an annual loss of $1.27 per share.

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