RIM woes in spotlight despite robust results

Fri Sep 17, 2010 5:09pm EDT
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By Alastair Sharp

TORONTO (Reuters) - Shares in Research In Motion ended almost flat on Friday as robust results were mostly overlooked and analysts stuck to pessimistic views on the BlackBerry maker amid a tough fight for share in the booming smartphone market, particularly in the United States.

A string of analysts cut share price targets for RIM, even though the Canadian company hurdled market forecasts for earnings per share, revenue and shipments, in its quarterly results on Thursday and forecast more strong growth in the current quarter.

RIM is increasingly dependent on lower-margin emerging markets in Latin America and Asia for sales growth -- 52 percent of its revenue came from outside the United States in the last quarter -- but India and other countries are also causing headaches with demands for access to encrypted data.

"The international growth, particularly in emerging markets and some of the prepaying markets is doing exceptionally well and it is masking this weakness we're seeing in North America," said Jeffrey Fidacaro at Susquehanna Financial, which downgraded RIM to "negative" before Thursday's results and has a share-price target of $37.50, one of the lowest in a scattered market.

A drop in net subscriber adds, which at 4.5 million failed to meet RIM's own guidance, also worried investors.

RIM's dominance of the corporate sector, where its secure email once reigned supreme, is weakening as employers increasingly allow use of Apple's iPhone and a slew of devices running Google's Android operating system.

Bernstein analyst Pierre Ferragu calculated subscriber growth was flat in North America in the quarter and saw little in the latest results to alter his negative view on the stock.

"The quarter shows no evidence of an improvement of the fundamentals of the business," he wrote in a note.   Continued...

<p>A customer walks into a BlackBerry store in Mumbai August 31, 2010. REUTERS/Danish Siddiqui</p>