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Market climate is 'intense', says RIM co-CEO

Posted: 17 Nov 2008     Print Version  Bookmark and Share

Keywords:BlackBerry  mobile phones  RIM revenue 

The current market environment is rife with challenges and requires careful planning of strategy, the co-CEO of Research In Motion said Thursday as an analyst warned that sales of RIM's BlackBerry smartphones would likely slow.

Speaking at an investor conference, RIM co-CEO Jim Balsillie said the company's high-end Bold model of the BlackBerry, targeted at business users, is selling "really well". He also reiterated his belief that even as the economy sputters, users are unlikely to give up their mobile phones to save money.

He said, however, that the current environment is difficult.

"This is a more intense time than I've ever known—more variables, more need to navigate, more hands on the wheel, eyes on the road right now," he said. "If you don't, you do it at your peril."

Investors and analysts alike have worried that the slowdown in the economy could prompt corporate customers to postpone upgrading their BlackBerry models from earlier versions as cost-cutting becomes a priority.

As well, retail consumers are seeking to slim down monthly expenses while they worry about the economy, unemployment and the stock markets and could opt to buy cheaper mobile phones than the feature-rich BlackBerry offered by Waterloo, Ontario-based RIM.

RIM's shares have reflected these worries in recent months. On Thursday, they were down 8.1 per cent to Rs.1,986.44 ($39.70) on the Nasdaq shortly after Balsillie's comments were reported. They were worth Rs.7,411.89 ($148.13) in June.

Also Thursday, UBS Investment Research analyst Jeffrey Fan cut his RIM revenue and earnings estimates to reflect lower sales during the slowdown.

"We do not expect RIM to be immune from the weakening economy," he wrote. "Although consumers are unlikely to get rid of cell phones, they may be more cautious about adding incremental monthly data fees, which could slow sales."

He said the early buyers of the Bold and of another new BlackBerry model, the touch-screen Storm, should help in the short term.

However, he added: "We remain cautious as to sustainability of momentum. We expect replacement cycles to continue to lengthen."

EE Times

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