Shares in wireless phone provider Research In Motion plunged on Feb. 11 after the company said it will report fourth-quarter earnings at the low end of previously announced expectations.

The news came with an update on subscriber additions, which RIM said will come in at 3.5 million, or 20 percent higher than the 2.9 million the company said it had expected on Dec. 18.

Battling Apple for Customers

Investors interpreted the announcements as further evidence that Waterloo [Ont.]-based RIM, maker of the BlackBerry line of wireless devices, is sacrificing its profit margins in a bid to win customers. RIM is engaged in a pitched battle with Apple, maker of the iPhone, for dominance of the hot market for smartphones.

In December, RIM projected fourth-quarter profit of 83 percent to 91 percent a share, and analysts forecast an average EPS of 85 percent. On Feb. 11 the company said it expects earnings to be “at or near the midpoint of the previously guided range,” for the quarter ending Feb. 28. RIM shares dropped sharply in pre-market trading and had dropped 9.50, or nearly 17 percent, to 47.54 by 12:45 p.m. ET in trading on the Nasdaq. The stock has lost more than two-thirds of its value since peaking at 148.13 in mid-June.

RIM plus said gross margins, a measure of profitability, will be at the low end of prior projections of 40 percent to 41 percent, down from 45.6 percent in the third quarter. The company cited several reasons, including an increase in the ratio of new subscribers versus subscribers who are upgrading to new devices.

New Curve Could Be Hard Sell

As part of its drive to attract users, RIM additionally introduced an update of its popular Curve device, the Curve 8900. The new handset, sold through T-Mobile, boasts an improved screen by the prior Curve model…

[Source] dhiram