Observers await word of Pearl sales

Research In Motion Ltd reports second-quarter earnings on Thursday and investors and analysts will be keenly watching for word of sales of the new BlackBerry Pearl, the wireless email device the company is hoping will capture a slice of the broader consumer market.

Analysts have been busy modelling their expectations in recent weeks, and while the numbers differ from one to another, strength is the overall tone.

According to Reuters Estimates, analysts expect RIM will report earnings of 71 cents a share before exceptional items, on revenue of US$643.43 million ($973.27 million) in the second quarter.

The multimedia-capable Pearl, aimed at individual users who traditionally would not have carried a BlackBerry, has been long awaited and analysts have said it will be the key to expanding RIM's markets.

It has debuted to rave reviews and, despite its still-limited availability -- the device was initially launched through T-Mobile in the US -- at least one early sales report appears positive.

"Feedback from T-Mobile retail stores suggests that the Pearl is selling very well at the outset, with most stores indicating the device is one of their top sellers, in some cases their best seller," Research Capital analyst Nick Agostino wrote to clients last week.

However, some are starting to caution that while RIM has effectively sewn up the BlackBerry business market, competition is much fiercer when it comes to consumers.

"We do not believe that RIM will have a lot of success in the prosumer market as it is here where the real competition is to be found," Nomura International Plc analyst Richard Windsor wrote in a note to clients on Tuesday.

"Prosumer" is analyst-speak for the individual professional who chooses to buy a BlackBerry on his or her own, rather than an employee who simply uses it after his company decides to buy it.

"The prosumer area that RIM is moving to address with its new flagship product (BlackBerry Pearl) is a completely different ball game as it is the user who chooses the device not the IT administrator," Windsor wrote, adding: "We believe that the likes of Nokia, Motorola and Samsung know far more about selling devices to users."

That said, Windsor still thinks RIM should beat analyst estimates during the second quarter without much difficulty and keeps a "buy" rating on the stock.

Peter Misek, who tracks RIM at Canaccord Adams, said that while he thinks RIM should be able to deliver 900,000 subscribers in the third quarter, management will likely be more conservative and forecast third-quarter additions at around 800,000.

And Paul Howbold, an analyst at Desjardins Securities, expects RIM to add 800,000 subscribers in the third quarter. However, he is also cautious about how RIM will perform at capturing "prosumers."

"Regarding the question of how effectively can RIM compete within the consumer email market, we are adopting a wait-and-see approach, given the much greater competition from the standard handset vendors," he wrote in a recent note.

- REUTERS