RIM's expanding BlackBerry pie
The smartphone shop takes the stage amid high expectations and slow spending.
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| BlackBerry's new Bold smartphone is expected to be in AT&T stores in August. |
NEW YORK (Fortune) -- Research in Motion is set to show whether it can keep defying the slumping economy and the slowdown in mobile phone sales, and withstand the looming threat of Apple's iPhone.
All eyes will turn to the Waterloo, Ontario tech shop when it reports its fiscal first quarter results after the market closes Wednesday. And you can be sure the crowd will be looking for the slightest cracks in the growth picture. Tech investors have placed a big bet on the BlackBerry maker, pushing the stock price and expectations to an all-time high in the past week.
RIM (RIMM) has managed to outrun the other giants of tech this year on the strength of its expanding business e-mail niche and the increased popularity of smartphones. For those keeping score, RIM is up 25% for the year while two other tech leaders Google (GOOG, Fortune 500) and Apple (AAPL, Fortune 500) are down 21% and 12% respectively.
Analysts expect RIM to post fiscal first quarter adjusted earnings of 85 cents a share, more than double the pro forma profit of 39 cents a year ago. Sales are also on a momentous clip, climbing 110% to to $2.27 billion by analysts' estimates.
The looming concern, of course is whether RIM's BlackBerry machine can keep on humming. The gravity of global recession and the pressure of Apple's head-on competition suggests not. But analysts and wireless industry observers say there's plenty of room to run.
Surprisingly, since the iPhone launch announcement, BlackBerry has continued to make gains and record strong subscriber growth, says CCI analyst Michael Cote.
The market in question is smartphones. While the worldwide mobile phone market has slowed to about 10% growth this year coming off a 17% run in 2007, the smartphone segment has been gathering steam. Smartphone sales increased 29% from year-ago levels in the first quarter, according to Gartner. Smartphones made up about 10% of total phone sales last year and they are expected to take 31% of the market in 2013, says research shop ABI.
Now, as the BlackBerry and the iPhone gain popularity outside North America, they start to chew up some of No.1 phone maker Nokia's prime turf.
Apple's and RIMM "have been growing faster than the market and Nokia's market share in recent quarters has slipped from as high as 50% to closer to 45%," RBC analyst Mark Sue writes in a research note Tuesday.
So what will fuel the momentum? Analyst pin their hopes on Bold, the 3G BlackBerry expected to hit the shelves at AT&T (T, Fortune 500) in August. This was a critical delay from the June-July debut that had been widely expected, and a late entry given the iPhone's subsidized arrival July 11. But the Bold is expected to trigger a new buying cycle as BlackBerry owners look to trade in their slower phones for the sleeker, faster new model.
People tend to see this wrongly as an Apple-versus-RIM competition, says CCI's Cote. "But I think it shows that there are two players that know what they are doing. The pie continues to grow, and while it grows both companies increase their share."
RIM fans can probably accept that its a two player race, but they are certainly putting their money on one to win. 
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