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RIM Unveils Blackberry 10 Prototype, But Investor Skepticism Remains High

 May 03, 2012 09:55 AM

(By Mani) Research in Motion (NASDAQ: RIMM) (TSX:RIM) unveiled its prototype BlackBerry 10 (BB10) device at its annual user conference in Orlando. However, investors remained skeptical as shares dropped 6 percent and 5 percent on the first two days of the conference on May 1 and May 2, respectively. The conference ends on May 3.

The prototype device with 4.2-inch screen and 1280x768 touchscreen sans QWERTY keyboard resembles a smaller version of the PlayBook and appears similar to many of the available Android touchscreen devices.

CEO Thorsten Heins appeared confident that RIM is meeting milestones to launch the device in the second half of 2012, while carriers may be targeting an October launch.

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RIM received applause from the friendly audience for new BlackBerry 10 features that address its core productivity/message-centric customer base. The BlackBerry 10 UI appears similar to Microsoft Metro with quick to view notifications and seamless multi-tasking as one can view a PDF attachment, email, and list of messages all at the same time.

RIM's new on-screen keyboard appears innovative offering predictive, next word suggestions, as opposed to just word completion, and may offer the productivity that BlackBerry users look for in a touchscreen. RIM appears that it will have BBM available for BB10 smartphones.

Several developers including Gameloft, Citrix, and others showed off some competitive apps on BB10. Many indicate that BB10 is easy to develop for, and a big improvement from legacy BlackBerry.

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"While RIM is addressing prior shortcomings that limited developer momentum, it is still playing catch-up vs. Apple's 600k apps and Android's 400k. We believe beyond core BlackBerry fans, RIM's smaller app/content ecosystem could constrain BlackBerry's traction among the broader consumer market," RBC Capital Markets analyst Mark Sue wrote in a note to clients.

Sue, who has a " sector perform" rating and $13 price target on RIM shares, continues to see near-term results below street expectations, as RIM sheds market share during its transition from legacy BlackBerry to BlackBerry 10. However, the good news is that RIM has cash and no debt.

Waterloo-based RIM, which was once the uncrowned king of smartphone world, is betting big on BB10 to revive its fortunes in the smartphone market, which has been dominated by Apple Inc. (NASDAQ:AAPL) and devices running Google's Android operating system.

For the fourth quarter ended March 3, 2012, Canadian -based RIM reported a net loss of $125 million or 24 cents a share, compared to a profit of $934 million or $1.78 a share for the year-ago quarter. Excluding items, net income was $418 million or 80 cents a share. Revenue for the fourth quarter fell 25 percent to $4.19 billion.

During the quarter, RIM shipped about 11.1 million BlackBerry smartphones and over 500,000 BlackBerry PlayBook tablets. On the other hand, Apple said its iPhone sales jumped 88 percent in the first three months of 2012 to 35.1 million units, while iPad sales surged 151 percent to 11.8 million units.

Shares of RIM plummeted 72 percent in the last year, and they have traded between $12.45 and $48.65 during the past 52-weeks.
"We see shares trading sideways and volatile as fundamentals remain challenging and visibility remains limited to BlackBerry 10 as a silver bullet. Licensing and partnerships may be a near-term catalyst, but the risk of becoming a sub 5% share player is a threat to a turnaround," Sue added.



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