[Tom]

Fears of increased competition has one U.S. analyst running scared from shares of Research In Motion Ltd. but Canadian brokerages can't seem to say enough good things about the maker of the handheld Blackberry e-mail device.


On Monday, Piper Jaffray analyst Michael Walkley said increased competition from bigger rivals will pressure RIM's profit margins and lead to slower sales growth. Checks with RIM's partners have led him to believe that sales of the cheaper 7100 “smart phone,” the first RIM product geared towards ordinary consumers, moderated in February from initially strong levels.


Mr. Walkley lowered his recommendation on the Waterloo, Ont.-based company to “market perform” from “outperform” and lowered his stock price target.


RIM's Canadian and U.S.-traded stock both tumbled to close down almost 8 per cent Monday.

But on Tuesday, Scotia Capital Inc. analyst Gus Papageorgiou contradicted the report, saying the fundamentals behind buying RIM are stronger than ever. He urged investors to buy the stock in the wake of Monday's fall.


“The Blackberry solution remains, in our opinion, the only real alternative for the enterprise and we see little chance of other offerings meeting the stringent security requirements of the enterprise,” he said, adding that after Monday's slide, the stock is trading at an “attractive valuation” of 22.5 times forward 12-month earnings.


Michael Urlocker, an analyst at UBS Securities Canada Inc., also released an upbeat note on RIM. His conversations with IT managers suggest that despite emerging competitor products, RIM remains the clear market leader.


The BlackBerry “continues to sell well into the enterprise with little risk of substitution from the less expensive BlackBerry 7100,” Mr. Urlocker said. “Feedback from the carriers we spoke with was that the $200 (U.S.) retail-oriented model 7100 is selling briskly in retail, and that it is adding incremental RIM subscribers rather than cannibalizing enterprise sales.”


Concerns that RIM's market share will be eroded by competitors are premature, Mr. Urlocker said, since Good Technology Inc.'s pricing is more expensive than RIM, Microsoft Corp. has “more work to do” before its wireless email device emerges as a significant threat, while Nokia Corp. and Siemens AG lack “enterprise credibility” with IT managers.


Shares of RIM, down 23 per cent since the start of the year, reversed course from Monday's fall and rose $1.81 (Canadian) or 2.4 per cent to $78.04 in Toronto. The U.S.-based stock climbed $2.21 (U.S.) or 3.5 per cent to $64.43.

http://www.theglobeandmail.com/servl...tory/Business/