August 17, 2006

Talk of Multimedia BlackBerry Stokes RIM Shares

TORONTO -- Renewed talk of a multimedia-packed BlackBerry aimed at the consumer market boosted shares of Research In Motion Ltd. on Thursday, with the stock also lifted by an analyst upgrade.

RIM, which has widely been rumored to be readying a retail-geared version of its BlackBerry e-mail device for launch in the coming months, rose $3.31, or 4.3 percent, to $81.03 on Nasdaq. In Toronto, the shares jumped C$4.19 to C$90.88.

The launch of several new handsets later this year and in early 2007, "including a yet unannounced, thin powerful QWERTY multimedia handset, are anticipated to drive revenues and shipments above consensus expectations," RBC Capital Markets analyst Mike Abramsky wrote in a note to clients on Thursday, upgrading the stock to "outperform" from "sector perform."

Some have said the multimedia handset will be called the BlackBerry Pearl, with recent rumors suggesting it will offer a camera with a built-in flash and zoom, as well as music capabilities.

While RIM's BlackBerry has become something of a staple for many professionals worldwide, the Waterloo, Ontario-based company has yet to penetrate the broader consumer market to a similar degree.

The success of that push into retail will be a huge part of RIM's future growth, Abramsky wrote. He believes RIM's "addressable market" will move from 51 million corporate and consumer users in 2006 to hit 244 million in 2009.

In an interview with Reuters last month, RIM co-chief executive Jim Balsillie said supporting new multimedia features such as music, photography and video was "a big part of our direction."

Canaccord Adams analyst Peter Misek has also speculated that RIM could partner with Apple Computer Inc. to create an "AppleBerry" -- potentially a BlackBerry handset equipped with Apple's iTunes music software and other multimedia features.

In his note on RIM, Abramsky also wrote that the BlackBerry seems to be standing strong in the face of competition from other handset makers seeking a slice of its market share.

"Recent flawed launches of 'Blackberry Killers' in our view deflate competitive threats, and affirm RIM's competitive barriers and consumer opportunity are stronger than expected," he wrote.

Some observers, for example, have said that Motorola's new Q smartphone could eat into RIM's share of the handheld market, but Balsillie said he has yet to see any impact.

RIM has declined any comment on the possibilities of a partnership with Apple or on the BlackBerry Pearl.

($1=$1.12 Canadian)