RIM results may show eroding growth outlook

Mon Dec 14, 2009 8:24am EST
 
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By Susan Taylor

OTTAWA (Reuters) - Research In Motion will come under close scrutiny when it reports third-quarter financial results this week as investors look for more signs that rivals are denting the iron-clad franchise once enjoyed by its BlackBerry smartphone.

Analysts say RIM is unlikely to be badly bruised by competition in the quarter, which includes the important back-to-school period and part of the holiday shopping season. Even so, they say, it may be just a matter of time before damage becomes apparent.

"It's a high-growth market and there's room for multiple players," said Avian Securities analyst Matthew Thornton.

"But the question isn't whether RIM can grow. The question is how fast is their previous growth rate going to come down."

Analysts bullish on RIM's prospects say the company should benefit from product launches, smartphone market growth and recovering consumer electronics demand.

That said, the competition is also stepping up new product launches that could eventually take a toll on RIM's growth.

Particularly worrisome is Motorola's Droid phone. Verizon Wireless, a U.S. carrier that's an important RIM partner, launched a massive marketing campaign for the Droid smartphone for the holidays.

TD Newcrest analyst Chris Umiastowski estimated in a report that Verizon was RIM's biggest service provider, with 28 percent of sales, in the last quarter.   Continued...