RIM shares drop after disappointing outlook

Research in Motion shares fall after disappointing outlook, drop in BlackBerry pricing

• On 12:19 pm EDT, Friday September 25, 2009

NEW YORK (AP) -- Shares of BlackBerry maker Research in Motion Ltd. fell sharply Friday after the company projected disappointing third-quarter sales and surprised some analysts by dropping the average sale price for its smart phones.

The stock fell $13.06, or 16 percent, to $70. It has traded between $35.05 and $100.96 over the past year.

RIM, based in Waterloo, Ontario, reported a 4 percent drop in second-quarter earnings late Thursday, hit by patent settlement charges.

The company also projected sales for the current quarter of $3.6 billion to $3.85 billion, while analysts polled by Thomson Reuters projected $3.95 billion.

In a conference call with analysts, CEO Jim Balsillie said the average selling price for BlackBerrys this quarter will be about $320, down $25 from the prior quarter. Balsillie said the move is aimed at pushing the company's phones from the corporate world out to mainstream consumers.

Some analysts were not so sure.

"Carriers are actively trying to bring down price points on smart phones, suggesting RIM faces worsening pricing pressure," Deutsche Bank analyst Brian Modoff told investors in a note, cutting the stock to "Sell" from "Hold."

Modoff added that RIM faces rising competition, while the company's new phones "offer little that is meaningfully different from existing products."

Goldman Sachs analyst Simona Jankowski took RIM off of the bank's "Conviction Buy" and cut it to "Neutral," citing similar concerns. She said RIM's new phones have failed to drive the kind of subscriber growth that new launches have in the past.

That trend "makes us doubt RIM's ability to maintain share in North America," she said.

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