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BlackBerry outage could cost RIM $26-million: analyst

A salesman arranges a BlackBerry mobile phone inside a display box at a showroom in the western Indian city of Ahmedabad October 13, 2011.


Research In Motion could foot a bill to the tune of as much as $26-million for the BlackBerry outage that hit users around the world last week, according to one analyst's estimate.

BMO Capital Markets analyst Tim Long said Monday that if RIM were to compensate all carriers and customers for the downtime of the BlackBerry network, its earnings would be negatively affected by three to five cents per share in the current quarter.

The calculation is based on RIM's 524 million shares outstanding.

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"While we believe the immediate financial impact from the outage is minimal, the risk to future service revenues, and maybe Blackberry shipments, has increased," Long said in a research note.

The company's stock price has been beaten down steadily for months to around the low $20s as RIM contends with a host of long-term factors, including the competition.

On Monday morning, RIM shares fell another four per cent after the company said it would offer Blackberry subscribers a credit of $100 towards selected premium apps to help make amends for the outage.

The Waterloo, Ont.-based company's stock dropped $1.10 to $23.16 on the Toronto Stock Exchange.

Estimates on how hard the BlackBerry-maker's earnings could be hit have varied dramatically over the past few days.

Last Thursday, Scotia Capital analyst Gus Papageorgiou predicted that RIM could take a US$182.3-million hit, or 22 cents per share, on its earnings if the company compensates carriers with one-month of fees, and assuming that half of RIM's subscribers were affected.

One challenge analysts face is determining how many of the company's existing challenges are already priced into RIM's badly beaten stock price.

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BlackBerry has been struggling to compete with numerous other smartphones that have entered the market, including Apple Inc.'s iPhone and several Android devices.

The olive branch of app offerings that RIM extended to its customers on Monday wasn't fully fleshed out, but the list provided with the announcement included iSpeech Translator, which converts words spoken or typed into the phone into multiple languages.

A variety of other popular mobile phone games were also listed, including versions of the Sims, Bejeweled, Texas Hold'em Poker and Bubble Bash.

The apps will be made available over the coming weeks on BlackBerry App World and will continue to be available until Dec. 31.

RIM also says its enterprise customers will be offered one month of free technical support.

Outages for RIM email, texting and Internet services began last Monday in Europe and spread to the Middle East, Africa and North and South America for varying lengths of time before services were fully restored on Thursday.

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RIM co-CEO Mike Lazaridis said in the announcement Monday that the company is grateful to its loyal BlackBerry customers for their patience.

"We have apologized to our customers and we will work tirelessly to restore their confidence. We are taking immediate and aggressive steps to help prevent something like this from happening again," he said.

A similar peace offering was made to Sony consumers earlier this year after its PlayStation Network was compromised by hackers that stole personal information from its users. The company gave PlayStation owners a package of free video games to download, and other services.

RIM says the BlackBerry outage lasted three days in Europe, the Middle East, India and Africa, one and a half days in Latin America and Canada, and one day in the United States.

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