HTC tumbles again; growth potential in doubt

HTC tumbles again; growth potential in doubt

Stock Market Predictions

TAIPEI (Global Markets) - Unnerved by a second profit warning in a month, investors sent HTC Corp shares tumbling for a second straight day on Friday on concern the world's No.4 smartphone maker may be running out of ideas in an increasingly competitive market.

The popularity of Apple iPhones and Samsung Electronics' Galaxy line-up, coupled with recession-weary shoppers and long-running lawsuits, have taken the gloss off what was one of the industry's biggest success stories.

With Nokia's fall from market dominance still fresh in the memory, and BlackBerry maker Research in Motion losing ground, HTC needs to recapture its innovative drive to make sure it maintains its position.

"It won't be easy for HTC to get out of the mess it's in right now," said Simon Liu, deputy investment officer at Polaris Group's fund unit.

"Still, it's not the end of HTC. It's certainly not another Nokia. Nokia missed out on the smartphone market from the very beginning, and didn't develop applications as well as Apple."

A SMARTPHONE NAMED DESIRE

For a decade, Taiwan's HTC quietly made phones for others to sell, but then decided to push its own brand in late 2006. In the year to April, its shares more than tripled after its innovative designs played well with shoppers.

Sales at HTC -- whose models include Desire, Sensation, Wildfire, Rhyme and ChaCha -- grew four-fold in a year and a half, and in the third quarter of this year it sold more smartphones in the United States than any of its rivals.

But its cracking performance is sputtering as it fails to bring out new products to rival the iPhone and Galaxy in the high-end smartphone market.

And, closer to home, China's ZTE Corp and Huawei Technologies Co Ltd are turning out smartphones that sell for as little as $100 in a fast-growth, low-cost market that HTC so far has largely avoided.

"It lacks a star smartphone," said CK Lu, an analyst with research firm Gartner in Taipei. "If you put HTC phones all in a line, you won't be able to differentiate the products too clearly, unlike Samsung's Galaxy 2 or the iPhone."

"In China, for example, consumers won't be able to differentiate HTC phones from a slew of others, such as the China-made ones, and that's where HTC is facing some problems."

REVENUE SLIDING

HTC, valued at around $14 billion, saw a bigger build-up of unsold inventory than rivals in the third quarter, a portent of weak sales in the crucial year-end holiday season.

Late last month, the company warned that revenue would fall by up to 8 percent in October-December from the third quarter, and on Thursday it flagged a much bigger drop, citing tougher competition and the global downturn.

"Aside from rising competition from Apple and Samsung in the high-end market, aggressive price competition from Huawei and ZTE at the lower-end could put further pressure on HTC's margin," said Laura Chen, analyst at BNP Paribas.

"We believe HTC is reviewing its product roadmap to regain market share in 2012. However ... most of its new products are to be launched only late in the first quarter."

HTC is also re-evaluating its $300 million acquisition of S3 Graphics after the graphics technology firm lost a U.S. legal battle against Apple, raising the specter that HTC products could be banned from the United States -- where it earns half its revenue. HTC had planned to buy S3 to beef up its defenses in its own separate lawsuit battle with Apple.

"Winning the lawsuit has made it possible for Apple to squeeze HTC by the neck in future," said Liu at Polaris.

HEADWINDS

These headwinds have pushed HTC shares down more than 60 percent in six months, making it the worst performer among major handset firms, along with RIM. Shares in LG Electronics Inc are down 36 percent and Nokia 29 percent. Samsung and Apple both rose around 9 percent in that period.

Five analysts now have 'sell' ratings on HTC, up from two just a month ago. The number of 'buy' recommendations has dropped to nine from 13, Thomson Global Markets StarMine data showed.

HTC shares fell by the most allowed in one day on Friday, dropping nearly 7 percent for a second consecutive session. The stock has fallen 30 percent in 8 straight trading days.

The company, which had 10.8 percent global market share in the third quarter, sold only 1 million more phones than RIM, and its market share gap with bigger rivals is set to widen as Nokia fights back with its first Windows-based models. [ID:nL5E7MG45M]

"HTC hasn't offered enough new models, and hasn't been aggressive in its pricing strategy," Barclays analyst Dale Gai wrote in a client note. "We believe Samsung leads HTC in most high-end models, including LTE phones, where HTC has failed to compete on form factor."

Gartner's Lu, however, sees little risk of HTC going the way of Nokia.

"Basically, HTC is on the right track, but it will take time for its brand- and retail-building. It's in way better shape than LG, RIM and Motorola. But it's true it's not as competitive as Apple or Samsung."

Annie Lu, a spokeswoman for HTC, said the company remained confident about driving new technologies. "HTC has a strong and complete portfolio in both high-end/premium and mass market high quality products," she told Global Markets.

"With our U.S. operator partners, we have launched premium products such as HTC Rezound (with Verizon Wireless) and HTC Vivid (with AT&T), with high customer satisfaction ratings.

"In the mass market sector, HTC Wildfire has been a big hit this year, and we expect strong sales with the HTC Explorer launch," she added.

(Additional reporting by Lee Chyen Yee in Hong Kong; Writing by Miyoung Kim and Jonathan Standing; Editing by Ian Geoghegan)

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RIM may warn on BlackBerry shipments, analyst says

RIM may warn on BlackBerry shipments, analyst says

Stock Market Predictions

(Global Markets) - Shares of Research In Motion dropped nearly 5 percent on Thursday after an influential analyst said RIM would likely warn that it came up short on BlackBerry shipments this quarter and offer an even bleaker outlook for its flagship smartphone.

The latest version of the smartphone - using the legacy BlackBerry 7 operating system that RIM will replace later this year - has failed to impress demanding U.S. consumers, Jefferies analyst Peter Misek wrote in a note to clients.

Tepid shipments are likely to translate into weaker-than-expected results for the company's fourth quarter ending March 3, he said. That could lead RIM to tip its hand before the formal release of its results on March 29.

Perhaps just as worrying, Misek said, consumer acceptance for RIM's smartphones is starting to erode in Latin America and Europe, where sales of cheaper devices have provided a cushion for the Canadian company as it falls behind the pace in the United States.

"There is a greater than 50 percent chance that RIM will negatively pre-announce the February quarter," said Misek, who is rated five stars by Thomson Global Markets StarMine for the accuracy of his earnings estimates on RIM.

FIVE QUARTERS OF DECLINE IN U.S.

It would not be the first time that the Waterloo, Ontario-based company has decided to come clean before releasing its results. It issued a sharp profit warning ahead of third-quarter results in December, sending its shares into a tailspin. It also revised its forecasts last April before the end of the quarter.

RIM's U.S. sales have fallen for five straight quarters, as consumers embrace Apple's iPhone and high-end devices running Google's Android software. The company has typically offset the decline with rising sales elsewhere.

"We believe Street numbers will likely be revised down given the lack of major new products in the near term and continued sales challenges due to competitive pressure from both low-end and high-end devices," said Misek, who rates the stock "underperform".

RIM's shares have slumped 80 percent from a peak in February last year as it misjudged the shifting landscape and botched the launch of the PlayBook, a poor-selling alternative to Apple's iPad tablet.

It has delayed the planned launch of new BlackBerry smartphones running on the same QNX system as the PlayBook until late 2012. Analysts view the launch of what RIM has dubbed the BlackBerry 10 as a "make or break" event.

Misek said RIM likely shipped fewer than 11 million legacy phones in the December-February quarter, a sharp drop from the previous three months as well as from the year-earlier Christmas season, traditionally the strongest period of the year for smartphone sales.

In December, RIM said it expected to ship between 11 million and 12 million handsets in the Christmas quarter ending March 3.

APPLE'S IPHONE 5 ON THE HORIZON

He lowered his quarterly earnings estimates to 69 cents a share on revenue of $4.2 billion, down from his earlier expectation of 82 cents a share on revenue of $4.6 billion.

At least for now, the average analyst forecast is for 83 cents a share on revenue of $4.58 billion, according to Thomson Global Markets I/B/E/S. RIM is aiming for between 80 and 95 cents a share and revenue of between $4.6 billion and $4.9 billion.

Misek is not alone in seeing lackluster BlackBerry shipments. Morgan Stanley analyst Ehud Gelblum dropped his estimate to 9.6 million from 11.5 million earlier this month.

Adding to RIM's woes, Apple is expected to launch an iPhone 5 before RIM puts out a QNX-based BlackBerry 10 device. Misek, who expects the new RIM device in September, said the debut of the new iPhone was particularly troubling for RIM, and he cut his price target on RIM's U.S.-listed shares to $12 from $15.

The shares slipped 4.6 percent to $13.51 by mid-morning on the Nasdaq. RIM's Toronto-listed shares are down 5 percent at C$13.33.

(Additional reporting by Sruthi Ramakrishnan in Bangalore; Editing by Frank McGurty)

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RIM caps dismal year with another profit warning

RIM caps dismal year with another profit warning

Stock Market Predictions

TORONTO (Global Markets) - Research in Motion booked a huge charge to write down inventories of its unloved PlayBook tablet on Friday, capping a dismal year with a steep profit warning that sent its shares tumbling almost 10 percent.

Waterloo, Ontario-based RIM, the company whose now ubiquitous BlackBerry created the concept of on-the-go email, said it no longer expects to meet its full-year earnings forecast due to weak sales, the PlayBook writedown and a charge related to a damaging service outage in October.

"This is a classic falling knife stock," said Eric Jackson of Ironfire Capital, who has previously bet on RIM's share price dropping but does not currently have a position in the stock.

"Although people keep wanting to buy into the belief that RIM has found a bottom, I see at least six more months of pain as they keep transitioning their business."

RIM, which Canada's industry minister on Friday described as a "Canadian jewel," has fallen out of favor with investors as it struggled to keep pace in a fast-changing smartphone market. In recent years, Apple's iPhone and Google Android devices have gobbled up RIM's once mighty market share.

RIM badly needs the PlayBook, launched to scathing reviews in April, to be a success as it plans next year to launch new smartphones based on the same QNX-based operating system used in the tablet.

PlayBook is a half-baked latecomer to a market segment where Apple's iPad has established an overwhelming dominance. Yet the poor reception it has received is just one of a string of problems facing the one-time technology darling.

The company has infuriated investors with several product missteps and profit warnings and RIM faced an embarrassing global outage in October, when customers were left without email and the popular BlackBerry messaging service for several days.

And if RIM cannot convince developers to build apps for the languishing PlayBook, its new smartphones will struggle to gain traction against the iPhone and Android devices that already boast huge libraries of applications.

Bernstein Research analyst Pierre Ferragu said RIM's latest warning was not a surprise itself. But he was alarmed that management apparently fails to see the writing on the wall for its products and for its corporate structure.

"What is more worrying, of course, is the profound denial the tone of the release reflects. Although it appears obvious to us that RIM's current strategy is bound to fail rapidly, the company continues to support it vehemently," he said.

"We can only hope that this increasing dissonance will accelerate necessary changes at the top of the company."

An activist shareholder said in October that some 8 percent of RIM investors back his call for RIM's board to replace its co-chief executives and consider a break-up or sale.

PLAYBOOK PRICE CUTS

Seeking to boost anemic PlayBook sales, RIM recently slashed prices on the device and plans to expand the promotion. It sold only about 150,000 tablets in the quarter to November 26, down from 200,000 in the previous quarter - a tiny fraction of the 11 million iPads that Apple sold in its latest quarter.

"RIM is continuing to suffer from its Playbook endeavors," said CCS Insight analyst Geoff Blaber. "It hurt RIM initially by diverting focus, but muted demand is now becoming clearly visible in the financials."

RIM's Nasdaq-listed shares fell 9.7 percent to $16.77 by the close. In Canada the shares fell 9.2 percent to C$17.08.

The shares have shed some three-quarters of their value since a February peak, a meltdown that has actually prompted some analysts to raise their ratings on RIM. Goldman Sachs said last month that the current valuation already fairly captures the fundamental concerns.

Speculation has also been rife that RIM could be the target of a strategic buyout.

Canada's Industry Minister Christian Paradis declined to comment on that speculation in an interview with Global Markets in New York, but he said Canada had to support RIM. Any takeover of a Canadian company of RIM's size can be blocked by the government if it decides the deal would not bring a "net benefit" to the country.

"RIM is a Canadian jewel," Paradis said in the interview, which was conducted in his native French. "First of all what I hope for is that RIM be able to be on a path of prosperity. As for speculation (about a takeover), we'd have to see what happened and consider if the law would apply."

FULL YEAR EARNINGS

In its warning, RIM said it no longer expects to meet its full-year earnings forecast of $5.25 to $6 per share because of weaker than expected smartphone shipments, a $360 million after-tax writedown on PlayBook inventories and a $50 million charge related to the October outage.

Excluding the two charges, RIM now expects adjusted earnings in the third-quarter to be at the low to mid-point of its previously forecast $1.20 to $1.40 per share range.

Revenue, excluding the outage charge, is expected to be slightly below the previously forecast range of $5.3 billion to $5.6 billion, in part because of the PlayBook discounting.

RIM, which reports third quarter results on December 15, said it shipped about 14.1 million BlackBerry phones in the quarter, in line with its earlier forecast of between 13.5 and 14.5 million.

It said it was confident the PlayBook promotion will help boost sales and reduce its inventories.

"Early results from recent PlayBook promotions indicate a significant increase in demand across most channels," Co-Chief Executive Mike Lazaridis said in a statement.

But RIM also said it expects to ship fewer smartphones in the current quarter than in the recently-ended third quarter, despite having a lineup of updated devices on offer in the traditionally busy Christmas period.

"We do not see any sign that RIM's downward spiral is about to bottom out," Nomura analyst Stuart Jeffrey said in a note for clients. "The company has a number of new phones on the market, yet guidance for Q4 suggests that their momentum is already starting to stall."

(Additional reporting by Phil Wahba in New York and Tarmo Virki in Helsinki; Editing by Janet Guttsman and Frank McGurty)

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Celestica shares hit 2-year low as major customer RIM cuts

Celestica shares hit 2-year low as major customer RIM cuts

Stock Market Predictions

(Global Markets) - Shares of Celestica Inc (CLS.TO) fell as much as 9 percent to a two-year low on Friday, a day after its major customer Research In Motion (RIM.TO) (RIMM.O) posted disappointing results and slashed its outlook.

Contract electronics maker Celestica's 21 percent sales in the March quarter came from BlackBerry maker RIM.

"In light of RIM's relatively large contribution to Celestica's overall revenue base, we believe RIM's near-term challenges could remain a headwind for Celestica's valuation," Paradigm Capital analyst Gabriel Leung wrote in a note.

Leung slashed his target price on Celestica shares to $12 from $14.

Citigroup analyst Jim Suva lowered his rating on Celestica to "sell" from "hold" and reduced his target price on the stock to $8 from $12.

Facing intense pressure from Apple (AAPL.O) and Google (GOOG.O) in the smartphone market, RIM on Thursday warned that its latest models would not hit U.S. stores until well into the valuable back-to-school shopping season.

RIM admitted delays in revamping an aging smartphone lineup and slashed what most analysts viewed as an unattainable full-year earnings outlook. It also said it planned to cut an unspecified number of jobs.

Toronto-based Celestica's shares were down 73 Canadian cents at C$7.80 in late-morning trading on the Toronto Stock Exchange. They touched a low of C$7.74 earlier in the day.

(Reporting by Arnika Thakur in Bangalore; Editing by Maju Samuel)

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RIM swoons on grim results, shareholders fret

RIM swoons on grim results, shareholders fret

Stock Market Predictions

TORONTO (Global Markets) - Research In Motion's dismal results and failure to deliver exciting new devices on time pushed its shares down more than 20 percent on Friday and drew parallels with other fallen technology stars.

The BlackBerry maker's shares plummeted below $28, hitting the lowest level in almost five years, after the company missed some of its own limp forecasts and reported a drop in profit.

It was RIM's sharpest one-day decline since September 2008 in trading volumes among its heaviest ever. The shares are down more than 60 percent since February, wiping billions off its market value.

Even more worrying, some of the company's largest shareholders are showing signs of bailing out.

One of RIM's biggest investors, Jarisloswky Fraser, has already cut its stake in half, according to Bloomberg.

Another gave RIM six months to get its house in order.

"I think in the next six months we'll have a much better idea of where we stand," said the head of a fund with a major stake. "They've laid out a business strategy and we're measuring their ability to execute."

LOWER TARGETS

At least 14 analysts lowered their price targets for RIM, most of them highlighting what appears to be a once-dynamic product development pipeline that's running dry.

RIM admitted delays in revamping an aging smartphone lineup and slashed what most analysts viewed as an unattainable full year earnings outlook. It also said it planned to cut an unspecified number of jobs.

"Bottom line, we believe RIM has no short-term fixes to improve product portfolio, brand perception, to reinvigorate share gains, revenue growth and profitability," Citi's Jim Suva wrote in a note to clients.

RIM's difficulties bear a striking resemblance to recent troubles at Finland's Nokia, another struggling national technology champion blindsided by the roaring success of Apple's iPhone and handset makers using Google's Android software.

Some analysts drew comparisons between RIM and Nortel Networks, the once-mighty Canadian equipment maker that went into bankruptcy and is selling its final assets.

RIM's co-chief executives both sounded contrite on a conference call with analysts. But analysts said neither appeared to fully comprehend the challenges that lay ahead.

"The company is facing its greatest challenge, maybe in its history, and each CEO continues to believe there is unprecedented interest in their products," Deutsche Bank's Brian Modoff wrote as he cut his price target to $20 from $45.

JP Morgan downgraded to "neutral" from "overweight".

"Until we see some evidence that product development is on track and visibility is returning we would advise investors to find other places to invest," its analyst Rod Hall said.

RIM's delay launching a touchscreen version of the Bold model and at least one other device, now due by late August, threatens its hard-won relationships with North American and European carriers, which expected the phones in July.

"We are concerned that RIM may have given them overly optimistic launch timetables, which may end up alienating" them, said Tero Kuittinen, an analyst from MKM Partners.

Cellular-enabled versions of RIM's PlayBook tablet, which would give carriers a reason to push the iPad competitor, aren't expected until autumn, from a prior summer timeframe.

LEADERSHIP QUESTIONS

The dim results and outlook also fanned questions about RIM's co-chief executives.

Deutsche's Modoff was disappointed that neither Mike Lazaridis nor Jim Balsillie described the planned job cuts as a reorganization -- which he would view as a positive.

Both brushed off criticism of RIM's dual chief structure with what seemed "more of a staged piece of theater than a serious answer to a serious strategic question," Modoff said.

RIM has cut staff before, in a 2002 move still known around its Waterloo, Ontario, headquarters as the "10 percent purge." That followed a dip in revenue and spiraling costs as it started selling its early BlackBerry phones via carriers.

But it's been all growth since then, with RIM now boasting more than 17,000 employees, up from 14,000 a year ago.

BRIGHT SPOTS

There were bright spots in the first quarter results, including 500,000 PlayBooks shipped. International revenue grew 67 percent partly on the back of RIM's BlackBerry Messenger instant messaging service. But that appeal may not be enough.

"The concern is the sustainability of that low-end market that is working for them now. I'm not sure over the long haul if that texting arbitrage is going to keep them afloat," said Matthew Robison from Wunderlich Securities, who suggested RIM may retract into a niche space serving corporations.

RIM's U.S.-listed shares closed down $7.58 at $27.75. The shares fell $7.13 to C$27.24 on the Toronto Stock Exchange.

(Additional reporting by Soham Chatterjee and Tenzin Pema in Bangalore; Editing by Frank McGurty and Janet Guttsman)

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RIM shares bounce back after shuffle-related drop

RIM shares bounce back after shuffle-related drop

Stock Market Predictions

TORONTO (Global Markets) - Shares of Research In Motion rose 8.6 percent on Wednesday, rebounding after two days of declines on disappointment over the choice of an company insider as the BlackBerry maker's new chief executive.

The jump followed a 8 percent swoon on Monday and a 3.5 percent drop on Tuesday. Over the weekend, RIM replaced co-chief executives Mike Lazaridis and Jim Balsillie with Thorsten Heins, a four-year veteran of the struggling company.

RIM's rise also came a day after Apple posted blockbuster quarterly results highlighting the strong global market for smartphones.

A report in a technology blog that said RIM's next-generation BlackBerry 10 smartphones were on track for a September launch may have also given a lift to the stock, said Todd Coupland from CIBC Capital Markets.

"The market might have been reacting to some blog reports that the first BB 10 products may be coming sooner than expected," he said.

Even so, Coupland was skeptical about the posting in the Boy Genius Report, which did not specify a source.

In December, RIM delayed the phones using the same software in its PlayBook tablet until the latter part of 2012.

The blog earlier this month said RIM was in talks to sell itself to Samsung, triggering a 10 percent spike in the shares.

Samsung later denied any interest in acquiring RIM, and a source close to the BlackBerry maker said the two companies had never been in buyout talks.

RIM's Nasdaq-listed shares closed at $16.30 and its Toronto stock was at C$16.40. The stock has fallen 75 percent in the past year.

(Reporting by Alastair Sharp)

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Research in Motion stock: the next PALM?

Research in Motion stock: the next PALM?

Stock Market Predictions

NEW YORK (Global Markets) - Some investors are betting Research in Motion's stock is in for more pain, even after a rough three years.

Shares of the BlackBerry maker have lost more than 38 percent since February. Investor attempts to pick a bottom in the stock have been run over by a slide dating from June 2008, when it peaked at $148.

Some in the options market don't see the trend arresting itself, making long-term bearish bets that RIM shares will fall to the mid-$30s by January 2012.

"There is a major divergence of opinion on the stock," said Bret Jensen, chief investment strategist at Simplified Asset Management, a hedge fund based in Miami, Florida.

"While some argue that it's somewhat like Apple before the big comeback, considering the cash flow and the attractive P/E ratio, others are asking, 'Is this going to be the new Palm?'"

Palm was another high-flying maker of handheld computers whose shares dropped dramatically as the market for smartphones became competitive. It is now owned by Hewlett-Packard Co.

RIM has been disappointing investors in recent months. Sales and earnings forecasts have been cut.

Its BlackBerry smartphone lineup has steadily lost market share, especially in the hyper-competitive U.S. market, to devices such as Apple Inc's iPhone and those running Google Inc's Android software.

Since early March, RIM shares have struggled to hold above their 10-day moving average, seen as buffering against further losses. The stock fell 1.1 percent at $43.74 on Friday.

Short interest is currently at a five-month high at 6 percent of the outstanding float, according to Nasdaq.

But a Thomson Global Markets StarMine analysis puts the stock's intrinsic value at $99.44, assuming a 10-year cumulative annual growth rate of 7.3 percent, below the industry average.

The stock's trajectory since February is ugly. Since hitting a 52-week high of $70.54, the pattern has been: Drop sharply, attempt a rebound, and get whacked again.

More disturbingly, volume has ticked up of late as the share slide has picked up speed.

For the stock to turn around, it would need to rally and sustain gains at what technical strategists call a "gap" in its price -- the sharp decline that occurred in late April from the mid-$50s to the $40s.

"The bottom of that gap is at the $50 area, so the stock would need to rally sharply from current levels just to begin that process," said Bryant McCormick, an independent quantitative analyst at optionMonster.com.

THE BEARISH BUTTERFLY EFFECT

Earlier this week, RIM recalled some of its Playbook tablet computers due to an operating system flaw. The company had hoped the launch of the long-awaited tablet could revive its fortunes, but the product garnered poor reviews and complaints it had been rushed out before it was ready.

Due to the recall, RIM's Nasdaq-listed shares fell as low as $42.61, just 9 cents above an August 2010 trough.

On the same day, an options trader bought 3,500 puts at the January 2012 $40 strike for an average premium of $3.77 each, sold 7,000 puts at the January 2012 $37.5 strike at an average premium of $2.83, and picked up 3,500 puts at the January $35 strike for an average premium of $2.10 each.

The strategy, known as a bearish put butterfly spread, implies an average break-even share price of $39.79 by expiration in January.

Maximum profits will be made if RIM shares plunge nearly 15 percent from the current price to settle at $37.50 at expiration, according to Caitlin Duffy, options analyst at Interactive Brokers Group.

A butterfly put spread involves a bet shares will fall, but only to a specific level. One profits by selling puts at a strike price that is between purchases at strike prices on each side, or the "wings" of the butterfly.

"Butterfly spreads on the stock suggest some options players expect RIM's losing streak to continue into next year," she said.

(Additional reporting by Doris Frankel in Chicago; Editing by Andrew Hay and Richard Chang)

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Storm clouds gather for RIM after profit warning

Storm clouds gather for RIM after profit warning

Stock Market Predictions

TORONTO (Global Markets) - Storm clouds over Research In Motion have darkened with a dismal profit warning, and the company's shares fell sharply on Friday after the company's third jolt of bad news in a month.

The BlackBerry maker, out of favor even with its fans, will need flawless execution on a promised next generation of gadgets to convince increasingly skeptical investors that it can run with mobile leaders Apple and Google.

Ontario-based RIM on Thursday slashed its sales and earnings forecasts, an unexpected blow that followed an anemic forecast in late March and last week's troubled launch of an as-yet underwhelming competitor to the red-hot Apple iPad.

"The updated guidance has substantiated a lingering concern about a growing portfolio gap in a hyper-competitive market," CCS Insight analyst Geoff Blaber said.

RIM tried to excite customers last year with an improved browser and upgraded operating system on its touchscreen and slideout keyboard BlackBerry Torch. But the response was tepid.

It promises another major upgrade and a slew of more powerful touchscreen devices at its annual BlackBerry World trade show in Florida next week.

RIM's products compete with those from Apple and with devices using Google's Android platform. Customers, are tired of waiting for RIM's innovations to kick in, are voting with their dollars for the rival phones.

RIM shares fell some 14 percent by early afternoon on Friday, in line with a late-trade fall on Thursday -- an eerily similar drop to that after its March results. The shares are around $49, their lowest level since October.

"We've heard for too long about RIM's great product roadmap. Consumers are not listening nor waiting," National Bank analysts said in a note. "RIM does not even seem to have dual cameras on its upcoming BlackBerry product line-up. The last time we checked, video is the future."

Thursday's after-market warning focused on weak sales of RIM's aging smartphones in the United States and Latin America, and the company lowered an already tepid outlook for the current quarter.

All hope seems to rest on what the Canadian company pulls out of its labs and onto center stage at BlackBerry World, starting Monday, where the company will unveil a new generation of touchscreen BlackBerrys.

LOSS OF FAITH

RIM had hoped to turn its fortunes around with the launch of its long-awaited PlayBook tablet -- a sleek tablet computer that runs on a fresh QNX platform that RIM says will transform its business.

But the PlayBook won dismal reviews and complaints it was rushed out before it was ready, despite a six-month launch pad.

"Mis-execution has undermined sentiment recovery," wrote Mike Abramsky, a longtime optimist on RIM. Abramsky kicked RIM out of his list of preferred stocks and slashed his target price to $55 from $90.

"PlayBook is a promising tablet contender, but RIM bears some responsibility for its less-than-favorable debut, confusion over its positioning and criticisms it was not fully ready for market," he wrote.

Customers and developers are eager to know when the PlayBook will run Android and BlackBerry smartphone applications, while investors want to know how many PlayBooks sold in the first week and when better phones will ship.

Jefferies analyst Peter Misek said RIM was scrambling to fix glitches in the PlayBook and integrate QNX, likely leading to delays for new handsets and flagging interest from carriers. He dropped his rating by two notches to "underperform" and cut his price target to $35 from $80.

RIM has tried to shift attention to what comes next -- a suite of phones running an upgraded (but not yet QNX-based) operating system with beefed-up hardware.

"We're cutting over to a whole new platform, a whole new set of products, a whole new set of architecture. And it's very, very powerful and very, very exciting," RIM's co-chief executive Jim Balsillie told a conference call on Thursday.

"Stay tuned, the products are truly fantastic both in terms of their style and their performance. The issue is, I would have liked to have them sooner."

The sliding stock price shows that the market is yet to be convinced.

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BlackBerry bashed as questions swirl about future

BlackBerry bashed as questions swirl about future

Stock Market Predictions

(Global Markets) - Investors drove Research In Motion's stock down 20 percent on Friday as dismal quarterly results raised prospects that the BlackBerry maker will be sold, broken up, or at least placed under new leadership.

The sell-off, which wiped out $3 billion of RIM's market capitalization, underscored how bad times have become for the one-time smartphone leader, once a byword for corporate communication.

A day after the earnings report, analysts spoke of disappointment, challenges and a ticking clock.

The latest misstep increased pressure on senior executives, who have been urged to step aside by investors and analysts concerned about repeated failures to execute strategy, and criticism spread to the company's board.

"Investors are telling us that a change needs to happen very quickly. The market is saying that the management are not the right guys to lead the company going forward," said Barry Schwartz, portfolio manager at Baskin Financial Services.

Run by co-founder Mike Lazaridis and salesman sidekick Jim Balsillie, who joined Lazaridis as co-CEO well before RIM had ever shipped a BlackBerry, the company this year set it sights on bringing out a tablet computer to compete with Apple Inc's iPad.

But results of the effort -- a tablet called the PlayBook -- have so far been disappointing. In addition, the company's BlackBerry smartphone is rapidly losing market share, and RIM has issued a series of damaging profit warnings.

Lazaridis and Balsillie report to a board that includes, in addition to themselves, seven other directors, only two of whom have any obvious background in the telecommunications or technology industry: John Wetmore, who served as finance chief of IBM Canada, and Antonio Viana-Baptista, who before retiring in 2008 worked at Telefonica.

"The board is culpable. It's been a little absent in terms of strategy ... and in overseeing what management is doing," said Paul Hodgson, senior research associate for GMI, a governance ratings firm. "They are supposed to be the representatives of shareholders and they're not doing a very good job of representing shareholders' interests."

But Hodgson said RIM's directors were in an unusually difficult situation because so much power is concentrated in the hands of Lazaridis and Balsillie, who each own more than 5 percent of the company and share the roles of chief executive and chairman.

"It's not a Yahoo situation where an independent director can fire the CEO," Hodgson said. "All the independent directors would have to agree to a management change."

Balsillie gave up his role as chairman in 2007 and regulators later forced him off the board amid a scandal related to back-dated stock options. Balsillie returned to the board in 2010, and he and Lazaridis were appointed co-chairman later that year.

Calls for change are mounting in the wake of Thursday's earnings report, which was chock-full of bad news. RIM posted a sharp drop in quarterly profit, painted a dismal picture for the current quarter, and said it now expects to reach only the lower end of an already reduced full-year outlook.

Moreover, the report reinforced a growing sense that the company is in danger of falling too far behind Apple, with its iPhone and iPad, and a host of competitors making devices that run on Google Inc's Android software.

RIM's Nasdaq-listed shares were down 20 percent to $23.58 in afternoon trade on Friday, after touching a low of $22.52 earlier in the day.

That could make the company a more attractive acquisition target, sparking interest from private equity or companies who see a cheap but profitable target, analysts said.

That might sit well with investors. Just this month an activist investor said it was rallying other shareholders in a bid to empower the board to look at options including spinning off patents or selling the entire company.

Absent a sale, Lazaridis and Balsillie will likely come under pressure to find another kind of big, dramatic step to turn around RIM.

"A dividend needs to be started immediately, share buyback needs to be increased dramatically, management needs to make a change and either an acquisition ... (or) some kind of merger, being taken over," said Baskin Financial's Schwartz. "That will stop the bleeding."

(Reporting by Paul Thomasch in New York and Alastair Sharp in Toronto; additional reporting by Sinead Carew in New York; Editing by Steve Orlofsky and John Wallace)

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