SAN JOSE, Calif. – A financial analyst downgraded his rating on Research in Motion, suggesting the company is entering a risky period in which it may lose share in the smartphone market. The move came as RIM pre-announced lower revenues for its current quarter.
On April 28, RIM said it expects sales of its BlackBerry smartphones "to be at the lower end of the range of 13.5-14.5 million forecasted in March and a shift in the expected mix of devices shipped towards handsets with lower average selling prices. This mix shift is also expected to result in revenue that is slightly below the range of $5.2-5.6 billion guided on March 24," the company said in a statement.
In a conference call, RIM executives pointed to slower than expected sales of handsets in Latin America. "We are downgrading the stock to neutral due to concerns that the international growth story is slowing and delayed product launches are creating a deeper hole for RIM to emerge from in the future," said Stephen Patel, an analyst with Gleacher & Co. in a research note.
Patel said the downturn in Latin America will depress overall international sales for RIM which were up 94 percent annually, helping the company balance sales that were down 9 percent annually in the U.S. In addition, RIM has delayed some new product introductions as much as two months, he added.
"We estimate that a quarter to a third of Blackberry subscribers in the U.S. who came up for contract renewals last quarter switched to other platforms, leading to an estimated net ~1 million subscriber losses in the U.S.," wrote Patel.
In its current situation, RIM will not be as likely as other competitors to gain share in Europe due to Nokia's current downturn and shift from its Symbian OS to Windows, he added.
"New products look compelling from a hardware perspective and also include substantial OS upgrades, but we do not think RIM can address its ecosystem shortcomings in applications as easily," wrote Patel.
RIM is falling behind the Apple iPhone and Android handsets in offering a broad set of third-party apps, he said. In addition, the Blackberry Playbook, panned by some reviewers for its lack of native email and Android app support, is expected to have a lower profit margin than the company's smartphones.