BlackBerry maker Research In Motion could see its share of the smartphone market eroded by competing devices like Apple's iPhone, analysts warned on Friday as RIM's stock plunged more than 16 percent in the wake of a disappointing profit and outlook report.
Analysts again wondered whether RIM would be able to hold its own as it fights an increasingly intense battle for retail and corporate subscribers, even as the economy seems to be stabilizing.
Such worries first surfaced ahead of the iPhone's launch in the summer of 2007, but RIM maintained it would be unshaken. It continued to post impressive subscriber gains and in late 2008 rolled out the touchscreen-based BlackBerry Storm, its answer to the iPhone.
Now, in wake of a profit and outlook report that fell short of expectations, analysts are again starting to doubt the Waterloo, Ontario-based company will be able to sustain its success.
RIM is unlikely to maintain its over 50 percent share in North America in the face of increasing competition from Apple, Motorola, and Palm, among others, Goldman Sachs analyst Simona Jankowski wrote in a note to clients.
Even in a still-benign competitive environment and with two newly launched products, RIM lost share for the second consecutive quarter, Jankowski added.
Goldman also cut its rating on the stock to neutral from buy.
Part of RIM's strength in the smartphone market is its impressively sized distribution network. Retail consumers and corporate clients can buy the BlackBerry from more than 500 carriers and distribution partners in about 170 countries around the world.
But as the iPhone and other rivals expand their reach, RIM could find itself fighting for previously uncontested territory.
Canada, RIM's home turf, is a good example. The iPhone is currently available from only one of the country's Big Three carriers, Rogers Communications.
However, the other two big players -- BCE Inc and Telus Corp -- are working together on a network upgrade that could let them offer the iPhone as early as next year.
All three carriers currently offer the BlackBerry.
RIM has also historically reported strong growth outside North America, but Jankowski cautioned this could now be stalling.
A second consecutive decline in international sales tempers our expectations for share gains overseas, the Goldman analyst wrote.
RIM's shares were down 16.8 percent at $69.08 on Nasdaq on Friday morning. In Toronto, the stock was down 16.4 percent at C$75.40. The company issued its latest earnings report after markets closed on Thursday.
Brokerage firm Raymond James also cut its rating on RIM to market perform from outperform.
Phillip Huang, an analyst at UBS, maintained a neutral rating on RIM, saying the shares would likely be range-bound until the company could show stronger top line momentum.
He added that sentiment could be muted near-term due to increasing competition (and) a potential relationship between Apple and Verizon Wireless.
Not every analyst was down on RIM in the wake of its results.
Peter Misek at Canaccord Adams said that although the results were negative, the stock still has upside potential. He reiterated his buy rating on the shares with a $110 target.
We maintain our long-term positive outlook on the stock, particularly with a series of impressive new product launches on the horizon, Misek wrote in a note to clients.
(Additional reporting by Euan Rocha and John McCrank, editing by Rob Wilson)