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November 23, 2005

Is Blackberry success being squashed?

Is the Blackberry boom over? Research In Motion has lowered projections for new subscribers because of product launch delays, though it backed its revenue forecast for the third quarter.

By CBR Staff Writer

RIM said its subscriber additions for the fourth quarter will be about 3 per cent lower than the initial forecast of 775,000 to 825,000. For the third quarter, ending 26 November, the company now sees subscriber additions about 8 per cent lower than the previously forecast range of 680,000 to 710,000.

But RIM reaffirmed its third-quarter revenue projection of $540 million to $570 million and said it does not expect any material impact to its prior fourth-quarter revenue guidance. In late September, the company predicted a fourth-quarter profit of 74 cents to 81 cents per share on revenue of $590 million to $620 million.

RIM’s prior projections were based on the expected availability in early November of two next-generation BlackBerry handsets, the 8700 and 7130 series. But those products have suffered launch delays, and national retail availability isn’t expected until early December.

While the delay in launch dates for these two highly anticipated products caused a timing shift in expected subscriber additions, the products are becoming available now and will help drive significant growth in the coming quarters, said Jim Balsillie, RIM chairman and co-CEO.

The product launch delays are the latest addition to growing uncertainty surrounding RIM. THe company is still awaiting final resolution of a Virginia court battle where a jury has found that BlackBerry’s maker had infringed on another company’s patent.

A federal judge is due to rule on RIM’s request to enforce a preliminary $450 million settlement that has unraveled with patent holding company NTP. In a worst case scenario an injunction could be imposed that would halt BlackBerry service in the US.

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