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RIMM: Are They In A Good Position To Compete?

Thursday, 20 Dec 2007 | 11:01 AM ET
A Blackberry devise is used
Susan Walsh
A Blackberry devise is used

These are heady times for RIMM , even though shares have suffered a precipitous decline since their highs in November; a bigger decline than Google ,Amazon ,Apple and so many others, off about 30 percent from those highs in early November, following a better-than-30 percent gain during the previous three months. Many will say these shares were do for some profit-taking.

Trouble is, this might be an over-correction based on what the Street expects from the company Thursday. This time around, the Street is looking for 62 cents a share on $1.65 billion, both categories up sharply from RIMM's second quarter.

There had been concerns that Palm's Treo 755p would eat into BlackBerry's business; or that Palm's new Centro, at $99, could attract some of RIM's customers. Well, Centro is indeed selling well, but the Treo 755p delay eliminated any BlackBerry threat.

There have also been worries about RIM's exposure to the financial services industry, dealing with the sub-prime mortgage meltdown and credit crunch. But with news Wednesday from Oracle that neither issue seems to be affecting its business, I'm not sure RIM will feel any pinch.

The key news to watch from RIMM comes from subscriber and handset sales: the company expects 1.65 million new subscribers, and a robust 3.7 million handsets sold on the quarter. Analysts I'm talking to suggest that RIM will need to beat those figures if the stock is going to react positively.

In fact, a strange scenario is shaping up: some analysts say an in-line report could lead to a "relief rally" of sorts because of some of the concerns driving shares lower recently. And if the company beats and raises, the stock could jump significantly.

Guidance on the call will be key: expectations for the current quarter may be unreasonably high, especially since RIMM isn't releasing any major new products and calls for significant growth are all over the stock anyway. RIMM may have difficulty living up to all those expectations and the stock could take a hit because of that. Still, longer term, this company looks strong through 2008.

This should be a solid quarter for the company. Palm is evaporating as a competitor. Motorola is missing in action. The real question remains just how much marketshare iPhone is taking and what threat a Nokia renaissance in the US might pose.

RIM might answer that new offensive with new touch-screen based BlackBerrys, ala the iPhone. The blogs are filled with purported images of what this device might look like. A RIMM device that performs like a BlackBerry but looks and feels like an iPhone could be a very compelling offering, to say the least. And something that could send these shares off to the races.

Questions? Comments? TechCheck@cnbc.com

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