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RIM shares fall on possible Mideast cuts Add to ...



U.S.-listed shares of Research in Motion fell 2.4 per cent Monday after the United Arab Emirates threatened to suspend services for its BlackBerry smartphone users due to security concerns.

Rim's U.S. shares fell $1.40 (U.S.), or 2.4 per cent, to $56.12 on Nasdaq after news emerged that services may be cut in UAE and Saudi Arabia after authorities stepped up demands on RIM for access to encrypted messages sent over the BlackBerry device.

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Avian Securities analyst Matthew Thornton said investors were worried that this could be a trend that could spread to other countries, but said there may be little real cause for concern.

"It is a worry but I don't think it's insurmountable. I don't think governments really want to cut off RIM," he said. "They had the same problem with China but got past it. They've been in talks with India.

"From where I sit right now I've a hard time seeing a material economic impact to them," Mr. Thornton added.

Strategy Analytics analyst Neil Mawston said RIM's practice of routing data via services in Canada has not stopped it from growing overseas so far, but noted that a high-profile case could change this.

"However, if there is sustained public attention drawn to this practice over several months, and if international growth starts to slow as a result, then RIM may have to review its policy of routing data via Canada servers," Mr. Mawston said.

"Any country in the world could potentially raise concerns if they think it will affect their security. Countries that already have relatively tight PC Internet controls are likely to turn their focus increasingly to wireless data services as they become more popular."



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The UAE said it would suspend BlackBerry Messenger, email and Web browser services from Oct. 11 until a fix was found, while industry sources said Saudi Arabia had ordered local telecom companies to freeze Messenger this month.

The Canadian company has more than 41 million BlackBerry subscribers, meaning the Gulf bans could affect fewer than 3 per cent of its users.

In Toronto, markets were closed due to a Canadian public holiday. RIM's Canadian shares had closed higher on Friday.

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