Bloomberg News

RIM Says U.K. High-End Share Rising as Company Seeks Rebound

March 02, 2012

Research In Motion Ltd. (RIMM), seeking to reverse two quarters of slumping sales in the U.K., said its higher-end smartphones are gaining share in a possible sign of recovery in one of the BlackBerry maker’s biggest markets.

“We’re in a very, very healthy position in the U.K.,” Managing Director Stephen Bates said in an interview at the Mobile World Congress in Barcelona, adding that demand for the new BlackBerry Bold 9900 has bolstered sales. He declined to say whether revenue growth resumed in the quarter that ends tomorrow. Waterloo, Ontario-based RIM reports results March 29.

RIM is trying to snap a sales slump caused by competition from Apple Inc. (AAPL)’s iPhone and devices running Google Inc. (GOOG)’s Android operating system. Revenue from the U.K., RIM’s biggest market outside the U.S., fell 14 percent last quarter as consumers shunned the aging technology and slower Web browsers of earlier BlackBerry models.

Peter Misek, an analyst at Jefferies & Co. in New York, said yesterday there is a good chance that RIM will announce disappointing results before it’s scheduled to report earnings on March 29 because BlackBerry shipments will have missed the company’s target of 11 million to 12 million units.

Missing Target?

“Sales in Europe decreased significantly towards the end of the quarter,” Misek said in a note. “This is very negative as sales outside of the U.S. had typically been more resilient.” He has an “underperform” rating on the stock.

RIM rose 1.6 percent to $13.79 at the close in New York. The stock has tumbled 91 percent from its peak in mid-2008.

RIM chose London for the global debut of some BlackBerry 7 phones in August because of its “great traction” in the U.K., which accounts for about 11 percent of revenue, Bates said. The BB7 phones, which introduced touch-screen technology and better browsers to the Curve and Bold models, only went on sale in early November, limiting their effect on sales last quarter, Bates said.

The Canadian company said it had 8.5 million subscribers in the U.K. at the end of last year and a 26 percent share of phone sales in December, citing data from research firm GfK.

That is key to creating a “healthy base” of higher- spending BlackBerry customers ahead of the unveiling of the first BB10 phones expected in the latter part of this year, Bates said. RIM is counting on those phones, built on an operating system called QNX, to revive the BlackBerry franchise that has been dogged by delays and marketing missteps.

The lack of new models at the BlackBerry stand in Barcelona stood in contrast to a slew of new devices showcased by Android handset makers Samsung Electronics Co. (005930), HTC Corp. (2498) and Huawei Technologies Co.

Bates said he’s hoping that the U.K. will be among the first markets to begin selling BB10 phones as European carriers begin offering faster LTE -- or long-term evolution -- networks in 2013.

“The QNX operating system gives us a step change in performance,” he said.

To contact the reporter on this story: Hugo Miller in London at hugomiller@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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