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The Street is optimistic that Research In Motion Ltd. will post a 41-per-cent jump in profits per share, on sales growth of 24 per cent, when the company reports fourth quarter results after the markets close Wednesday.

The expectations fall within the targets set by the BlackBerry maker itself and speak to the global power of Canada's brightest technology player.

But that has not stopped investors from fretting about the future of RIM in the wake of tough competition from Apple Inc. and the popular iPhone, as well as the anticipation of another Apple win from its iPad tablet computer launching next month. RIM shares lost more than 1 per cent yesterday while Apple's stock climbed by a similar amount.

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Over the last 12 months, RIM shares gained 39 per cent next to Apple's 126-per-cent jump.

RIM trades at just 11 times earnings estimates for next year compared with 17 times for Apple. On a price-to-sales basis, RIM trades at nearly 3 times current sales, compared with Apple's 4.5 times.

With the market for smart phones red hot these days, investors continue to discount RIM in relation to Apple on fears the iPhone will overpower the BlackBerry.

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Part of their concern relates to intangible forces and part to some financial forecasts.

Bob McWhirter, president and portfolio manager at Selective Asset Management Inc. in Toronto, which doesn't own the stock, thinks RIM suffers from lost opportunity. The company isn't matching Apple in terms of third-party applications, effective advertising or promotion from its telecom partners, he says.

"I want to see the carriers put their shoulder behind the wheel and really promote the BlackBerry," he says.

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Similar to some financial analysts, Mr. McWhirter also thinks RIM could lose its technological advantage over its rivals as the mobile market matures.

BlackBerry devices are significantly more efficient when it comes to bandwidth requirements than any other smart phone.

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But with telecom companies investing billions to strengthen their networks and also turning to third-party players such as Bridgewater Systems Corp., DragonWave Inc., and BTI Systems Inc. for smarter ways to handle traffic flow, the technical advantage RIM enjoyed a decade ago may not last.

Financially, RIM continues to rack up impressive gains, but its profitability and rate of growth are under some pressure. And investors and analysts have widely divergent views about its future.

Pierre Ferragu, senior analyst with Sanford C. Bernstein & Co., estimates that RIM will report gross margins for its last fiscal year of 43 per cent, compared with 46 per cent, 51 per cent and 55 per cent over the previous three years.

Those figures top Apple's gross margins of just over 40 per cent, but investors are concerned about the downward trend compared with Apple's steadier pattern.

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Mr. Ferragu has an "underperform" rating on RIM's stock and a target price of $55 (U.S.). In the U.S., RIM closed yesterday at $74.92, down 78 cents.

On the other hand, however, RBC Dominion Securities Inc.'s Mike Abramsky, thinks investors have undervalued RIM.

He has a price target of $120 on the stock and rates it a "top pick."

Although he sees Apple growing faster than RIM (off a smaller base), he says RIM outsold Apple two-to-one in the North American smart phone market last year.

Mr. Abramsky estimates that RIM will boost North American shipments by 35 per cent this calendar year compared to Apple's 40-per-cent growth.



Outside North America, RIM sales have been particularly strong, representing a record 44 per cent of the company's total, he estimates. That includes strong growth in Europe, where Nokia Corp., the world's largest cell phone company, has historically ruled.

"BlackBerry appears to be gaining brand recognition with consumers as a status symbol and fashion item, helping accelerate BlackBerry demand," Mr. Abramsky wrote in a recent note.

"RIM is making particularly strong inroads and winning over carriers in Europe, Nokia's home territory."



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