RIM says BlackBerry remains secure amid UAE spat

Mon Aug 2, 2010 5:35pm EDT
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By Sinead Carew and Frank McGurty

NEW YORK/TORONTO (Reuters) - Research In Motion pledged to satisfy the security needs both of customers and governments, a day after the United Arab Emirates threatened to cut off some BlackBerry services because authorities could not access encrypted messaging data.

In the latest of several disputes over BlackBerry security, the UAE said over the weekend that it would suspend BlackBerry Messenger, email and Web browser services from October 11 until it could access encrypted messages.

The news drove RIM's Nasdaq-listed shares down as much as 2.7 percent on Monday, before they recovered to trade down less than 1 percent as some analysts said they were optimistic that the security issue could be resolved.

The Blackberry's tight email security has been key to its popularity with businesses, and is RIM's main selling point against Apple Inc, Nokia and other rivals. But governments like the UAE, Saudi Arabia and India are concerned that those same features make it difficult for them to monitor BlackBerry messages for national security purposes.

While the UAE ban would affect less than 3 percent of RIM's more than 41 million subscribers, analysts said investors were concerned that these spats could spread to other regions.

"It is a worry, but I don't think it's insurmountable. I don't think governments really want to cut off RIM," said Avian Securities analyst Matthew Thornton.

"They had the same problem with China but got past it. They've been in talks with India.

"From where I sit right now I've a hard time seeing a material economic impact to them," Thornton said.   Continued...