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A hopeful year-end for BlackBerry?

Monday 3 December 2012 | 15:22 CET | Market Commentary
What's going on with Research In Motion? The Blackberry maker's share price has been going up for weeks now, thanks in part to a number of investment banks making positive noises about the company's new direction. This centred on the planned launch of BlackBerry 10 at the end of January 2013.

The sudden optimism about the company, which in recent years has been through any number of setbacks, is remarkable. We've known RIM is targeting a mid-range position for its new smartphone OS, and that the company is sparing no cost or effort to tie developers to the new platform. At the same time, little is known about the exercise RIM is embarking on next year. The new Flow interface on the OS received a mixed early response, and the only new BlackBerry devices seen so far have been leaked photos. 

Still, various analysts predict that RIM is on the verge of a new period of prosperity. 

Canada-based National Bank Financial estimates RIM will ship 35.5 million BlackBerry devices next year, better than the company's earlier estimate of around 32 million. In its last reported quarter, ended 30 September, RIM shipped 7.4 million mobile devices, down from 7.8 million in the previous three months and 14 million two quarters earlier. On average RIM should have a better year in 2013 then. 

The relatively good prognosis can be attributed to a number of things going well at RIM at the moment. The company is working hard on bringing its costs under control, and the number of BlackBerry subscribers continues to grow, especially in emerging markets. Furthermore, despite ongoing losses, RIM can still rely on a strong cash position, which can be spent next year to give the new platform BlackBerry 10 an extra boost. 

At the same time, RIM is losing share on the market where it first made its name. A growing number of businesses and public sector organisations are abandoning BlackBerry in favour of Apple's iPhone or devices running Google’s Android. In the important North American market, RIM has around 1 million government customers, of which some 400,000 upgraded their BlackBerry device this year. Or in other words, more than half a million have yet to upgrade, either in anticipation of BlackBerry 10 or because they are considering moving to a rival platform.

The question in 2013 will be whether RIM can compensate for losses in its traditional markets with growth in markets such as South America and southeast Asia. 

In short, the worst seems to be behind RIM. The losses to come have already been factored in by RIM, analysts and shareholders alike. What's important is that RIM makes no missteps early next year, in order to keep confidence in the company high. Analysts can change their opinions in a flash if the slightest thing goes wrong, and the share price will respond immediately. 

When BlackBerry 10 is born in late January, some fireworks should be expected. 



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