Ahead of the Bell: Research in Motion

AP News
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Posted: Mar 30, 2012 8:40 AM
Ahead of the Bell: Research in Motion

Analysts said they expect tough times to continue for Research in Motion Ltd., following the struggling BlackBerry maker's disclosure that it will return its focus to its corporate customers after failing to compete with flashier iPhone and Android models in the consumer market.

The Canadian company has long dominated the corporate smartphone market. Its BlackBerrys are known for their security and reliability as email devices. It has tried to expand its appeal to consumers, but it has had trouble because the phones aren't perceived to be as sexy as its chief competitors.

RIM has been counting on improvements with its forthcoming BlackBerry 10 system, but that has faced multiple delays. BlackBerrys also lag iPhones or Android phones when it comes to running third-party applications. Touch-screen models that lack physical keyboards have largely flopped.

The shift in strategy came amid a management shakeup that includes longtime executive and former CEO Jim Balsillie leaving the board. David Yach, chief technology officer for software, and Jim Rowan, chief operating officer for global operations, also are leaving.

William Blair analyst Anil Doradla backed his "Market Perform" rating for RIM, saying it could take several quarters or even years for the company's overhaul to take shape.

"We believe RIM will be playing catch-up for the next year or more, and is subject to further share loss, subscriber churn, pricing pressure, and margin pressure," Doradla wrote in a note to investors. "In our view, believing in the potential solutions requires a leap of faith that we are not willing to make."

Jefferies analyst Peter Misek reaffirmed his "Underperform" rating for RIM, saying he expects trends to only get worse and for the company's August quarter to be "dire." He also questioned the timing of the management changes.

"While we think RIM needed a shake-up, doing so six months before the biggest product launch in the company's history is concerning," Misek wrote in his note.

RIM shares rose 34 cents, or 2.5 percent, to $14.07 in premarket trading. They are trading near the lower end of their 52-week range of $12.45 and $57.85.