Saturday, October 10th17.9°C

Roll down the RIM share price

Shares in Research In Motion fell more than 20 per cent Friday as analysts raised concerns about less revenue from the lucrative service fees charged by the company to use its secure network.

BMO Capital Markets analyst Tim Long said changes to the company's service revenue model, outlined Thursday, add more risk for RIM, which is preparing for the launch of its next generation of smartphones and operating system next month.

"We have long viewed the recurring service revenues as the key value driver for the stock," Long wrote in a note to clients.

"With subscribers declining, and the potential for a faster drop in average revenue per user, service revenues could fall even faster. That said, the stock will be most dependent on the launch on new BB10 devices, and we believe it is too early to make a call on, success or failure."

The stock was down $2.92, or 20.93 per cent, at $11.30 late day Friday on the Toronto Stock Exchange on very heavy volume of more than 13.8 million shares, making it easily the most active issue on the TSX.

The drop in the stock came despite better than expected financial results by the company in its report after the close of markets on Thursday.

However, it was the plan for the service fees that attracted the most attention.

RIM (TSX:RIM) wants to launch an a la carte menu of services where both enterprise customers and casual smartphone users can pick their packages.

"The company had previously alluded to potential changes, but the issue is moving more to the forefront now," Long wrote in his report.

"We found the details lacking for such a significant announcement. We believe the service model for the consumer segment is more at risk than for enterprise."

RIM reported Thursday a third-quarter profit of $9 million, or two cents per share on $2.73 billion in revenue, compared with a profit of $265 million or 51 cents per share on $5.17 billion in revenue a year ago.

On an adjusted basis for the quarter, RIM said it lost $114 million or 22 cents per diluted share, coming in notably better than analyst expectations of a quarterly loss of 32 cents per adjusted share on revenue of $2.6 billion.

The Canadian Press

Read more Business News

Recent Trending

Today's Market
S&P TSX13964.36-14.30
S&P CDNX552.26+5.20
S&P 5002014.89+1.46
CDN Dollar0.7723-0.0001
Natural Gas2.52+0.02

Okanagan Companies
Pacific Safety0.225-0.005
QHR Technologies Inc1.25+0.02
Metalex Ventures0.07+0.02
Russel Metals21.26-0.29
Copper Mountain Mining0.66+0.05
Colorado Resources0.07+0.00
ReliaBrand Inc0.0175+0.0009
Sunrise Resources Ltd0.02+0.00
Mission Ready Services0.075-0.005
Decisive Dividend Corp3.25+0.14
Diamcor Mining0.97+0.03



23617971350 6th St
5 bedrooms 3 baths
more details
Click here to feature your property
Please wait... loading

Income for life?

Photo: Thinkstock.comIn almost every conversation I have with clients these days, the topic swings to interest rates. What direction they’re going, how long will they stay where they are and how...

Perfect (reno'd) home

Photo: Thinkstock.comHow many times have you found a home in the perfect location, but it needs too much work as per the home inspection? There is a great program available through most lenders that w...

5 Claim misconceptions

Photo: Thinkstock.comIf you have been hurt in an accident or as a result of medical negligence you will likely look to your friends and family for some advice on how to deal with the situation. These ...



Member of BC Press Council