*RIM due to report Q3 results Thursday after market close
*RIM has warned results will be weaker than expected
*Investors likely to focus on sales outlook, U.S. economy (In U.S. dollars unless noted)
By Wojtek Dabrowski
TORONTO, Dec 17 (Reuters) - Investors will keep a close eye on the outlook that Research In Motion RIM.TORIMM.O provides when it reports quarterly results on Thursday, hopeful for signs that the global economic downturn is not exacting more pain at the company that makes the BlackBerry smartphone.
RIM cautioned about two weeks ago that on it would report weaker-than-expected results for its third quarter, ended Nov. 29. Investors will not only watch to see if the company meets the diminished expectations, but will also focus on its forecast for its fourth quarter, which ends in February.
The company has rolled out a series of handsets -- a flip-phone BlackBerry, the touch-screen Storm and the high-end Bold -- at the same time as uncertainty has mounted about the appetite of both its large corporate clients and the retail consumer.
Analysts are concerned big companies could delay BlackBerry upgrades as they clamp down on costs and that retail users could choose less feature-rich phones than the BlackBerry in hopes of saving money.
These concerns will be top of mind in the company’s fourth quarter, which includes December’s traditionally strong holiday shopping season.
A long-term sales slowdown would mark another setback for RIM investors, who have seen the company’s shares lose more than 70 percent of their value since June as the economy slows.
Deepak Chopra, an analyst at Genuity Capital Markets, said on Wednesday the fourth quarter will be “the toughest quarter in some time to gauge, given the uncertainty of the new year in both the enterprise and consumer segments, versus RIM’s new product lineup.”
On Dec. 2, Waterloo, Ontario-based RIM warned its third-quarter revenue and earnings will come in below earlier forecasts because of the economy as well as delayed product launches.
It said it now expects it will have revenue of $2.75 billion to $2.78 billion and diluted adjusted earnings of 81 cents to 83 cents a share.
“Despite the impact of later product launch dates and general economic weakness in the United States, customer response to the new BlackBerry products launched this quarter has been exceptional and RIM has experienced particularly strong momentum in recent weeks,” it said at the time.
Chopra agrees with RIM, writing in a note to clients that checks with wireless carriers indicate that the Storm is selling well at Verizon (VZ.N) in the United States and Vodafone (VOD.L) in Europe, while the Bold is “doing much better than anyone envisioned” at AT&T (T.N), another U.S. carrier.
He forecast revenue of $2.97 billion and earnings per share of 84 cents for RIM’s fourth quarter, but cautioned that “the enterprise” -- or RIM’s base of large corporate clients -- “is more uncertain.”
RIM’s rollout of consumer-aimed devices such as the flip-phone BlackBerry and the Storm is part of its aggressive push to diversify its client base beyond the executives, politicians and other professionals who have been its mainstay.
Even though the company is exposed to the consumer market and intense competition from the likes of Nokia (NOK.N), Motorola MOT.N and Apple’s (AAPL.O) iPhone, RIM is expected to remain one of the strongest companies among its peers.
“While facing both external headwinds and execution challenges related to its consumer transition, RIM remains a strong competitor with intact fundamentals and competitive advantages, in our view,” RBC Dominion Securities analyst Mike Abramsky wrote in a note to clients ahead of RIM’s earnings.
“While risks to growth and margins remain, we do expect RIM to address its execution issues in time.” (Reporting by Wojtek Dabrowski; Editing by Frank McGurty)