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Winnipeg Free Press - PRINT EDITION

RIM faces questions about future growth

By: LuAnn LaSalle

Posted: 12/19/2009 1:00 AM | Comments: 0 (including replies)

MONTREAL, Que. -- The BlackBerry faces more competition in the consumer market, especially in North America, and it's entry into China will have challenges, analysts say.

Fresh from a gain of more than 10 per cent on Friday and after beating profit expectations, Research In Motion faced questions about if it can maintain such growth.

Pacific Crest analyst James Faucette believes the company's 2010 financial year could be RIM's earnings peak.

"We believe that Research In Motion could face an uphill battle to maintain its recent breakneck growth," Faucette wrote in a research note.

PC Magazine analyst Sascha Segan said BlackBerrys are starting to look a bit dull and "definitely need a facelift" to appeal to more consumers. "RIM's devices are popular, reliable, successful, but they've had less and less mind share over the past six months as the iPhone and Android have really grown as phenomena," Segan said.

Google's Android operating system can be modified and customized by developers for different mobile phone companies and is found in smartphones made by Samsung, HTC and LG.

"At the very least, making BlackBerrys cost the same as other mid-range smartphones on a monthly basis is critical to maintaining consumer market share," said Segan, managing editor of mobile at PCMag Digital Network in New York.

He noted the BlackBerry Pearl made RIM a hit with consumers four years ago and RIM needs another device to resonate like that with the buying public.

For its financial results, RIM said it earned US$628.4 million or $1.10 per diluted share for the quarter ended Nov. 30. That compared with a profit of $396.3 million or 69 cents per diluted share a year ago.

According to Thomson Reuters, the average analyst estimate had been for earnings of $1.04 per share and $3.78 billion in revenue.

Faucette said RIM has effectively stopped growing at the high-end of the market in the United States.

That places increasing importance on growing in international markets and selling at the lower end, said Faucette, wireless communications analyst at the Oregon-based firm.

UBS Investment Research said RIM's results have alleviated "most bearish fears" but there will be new devices and potential pricing pressure from smartphone competitor Palm.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition December 19, 2009 B13

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