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RIM growth lags behind expectations

by Sarah Griffiths on 25 June 2010, 16:33

Tags: RIM (TSE:RIM)

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Pretty good but must try harder

Research in Motion (RIM) has notched up first quarter sales growth of 24%, but has fallen short of analysts' expectations due to increased competition in the smart phone space from the likes of the iPhone and Android.

RIM's first quarter revenue soared to $4.24bn, compared to $3.42bn in Q1 of last year, a rise of 24 percent. Although this was clearly good news for the BlackBerry maker, analysts had predicted a heftier $4.35bn revenue based on the average estimate put together by Bloomberg.

Experts fear the QWERTY keyboard-based handset may lose out to touch screen technologies such as the Apple iPhone, which also provide plenty of screen space for users to watch films, play games and view applications.

They apparently believe RIM needed to exceed analysts' expectations to show the BlackBerry is still in demand and a market-leader in terms of future innovation and popularity.

However, RIM's share price was down over eight percent at time of writing in reaction to the trading announcement.  Rim has offered to buy back up to 31m shares from unhappy backers after the stock, listed on the Nasdaq stock market, plunged around 20 percent this year.

Almost 80 percent of RIM's revenue came from the BlackBerry devices, with 11.2m handsets shipped in the first quarter alone.  Furthermore, nearly 5m net new BlackBerry subscriber accounts were added in the same time frame, totalling 46m users by the close of Q1.

Net income from the quarter was $768.9m compared with a net income of $710.1m in the previous quarter and $6.43m in Q1 last year.

While the numbers sound impressive, IDC research has recently found RIM's slice of the smartphone market declined to 19.4 percent, a slump of 1.5 percent since last quarter alone and is in danger of being overtaken as the second largest vendor of smartphones by Apple. 

In stark contrast, the iPhone producer's market share rocketed neatly 130 percent from last year, to claim just over 16 percent of the smartphone market, and that's without taking into account record iPhone 4 sales.