Blackberry's iPhone Rival Becomes a Big Headache

Analysts looking at the Research In Motion's latest results are surprised that the smart phone maker is encountering higher manufacturing and marketing costs.

RIM CEO Jim Balsillie said today that the company's newer models aren't as profitable as the older ones since they cost more to produce.

"This is particularly the case with (BlackBerry) Bold and other unannounced 3G product platforms," he said in a conference call today according to Reuters.

"It's difficult to pass on all these costs to customers," he added.

Analysts are surprised at the challenges from a company which has gained a very strong foothold in smart phone sales.

"The cost of selling and marketing all these platforms is much higher than what people though," Pablo Perez-Fernandez, an analyst with Global Crown Capital told Bloomberg. He doesn't own shares and is recommending buying.

Peter Misek, an analyst at Canaccord Adams is also down on the company latest three-month financial report.

"This is a surprise, and not a positive one," Canaccord Adams analyst Peter Misek said, according to Reuters. "For next quarter, gross margin ... is way lower than we thought."

Investors were spooked after the results released late Thursday as the company's stock fell nearly 20 percent. Profit in the third quarter will come in below expectations of 99 cents per share to between 89 cents and 97 cents, the company said. Today.