More investors walked away from Research In Motion on Friday, its shares down almost 12 per cent after the company issued disappointing financial results and delayed the rollout of new BlackBerrys aimed at the U.S. market.
Shares in the Waterloo, Ont., company were down $1.83 to $13.97 at the close of trading on the Toronto Stock Exchange.
"They're losing share in the U.S.," Evercore Partners analyst Alkesh Shah said from New York. "They know the U.S. is a premium market."
The BlackBerry maker's share of the lucrative American smartphone market is down to about 10 per cent this year and RIM said it will now focus on winning over more customers south of the border.
But RIM has announced it will not roll out its new generation of BlackBerrys until late 2012 due to a delay in getting a chipset that will give the smartphones long battery life and allow them to run on faster, advanced wireless networks in the United States that are ideal for video streaming and other data services.
"I can understand why they want to come up with a killer device," Shah said of the BlackBerrys that will run on networks called Long-Term Evolution (LTE) technology and are dubbed "superphones" for their more computer-like experience.
"The challenge is, even though the device may be amazing from an engineering specification point of view, it may not be attractive enough to a consumer from a user experience point of view."
By the time these BlackBerrys arrive in the marketplace, there will be even more Android smartphones to choose from as well as Windows smartphones and expect Apple to have another new iPhone, he said.
The latest stock tumble came after RIM reported late Thursday that quarterly profits plunged to US$265 million, a steep drop from $911 million in the same three-month period last year.
Analysts were quick to criticize the results and the outlook for the new year.
Wunderlich Securities analyst Matthew Robison said U.S. sales dropped 44.5 per cent year-over-year, while sales outside North America, where the BlackBerry Messenger texting service is popular, were up 21 per cent.
The delay of the new BlackBerry 10 smartphones is surprising, said Robison, who's based in San Francisco.
"In the meantime, a lot of super smartphones with poor battery life will be sold by other brands," he wrote in a research note.
National Bank Canada analyst Kris Thompson said it's likely game over for RIM.
"We can't be confident RIM even hits the 2012 holiday season."
Thompson said RIM's focus on the U.S. market, which will start soon with advertising and promotions of its current BlackBerrys, is doubtful.
"This is likely money down the drain," he said.
RIM has faced heightened competition in recent quarters as other smartphones like Apple's iPhone and devices powered by Google's Android system take a larger chunk of the market.
Prime Minister Stephen Harper noted RIM's challenges and said high-tech companies like it are vital to the Canadian economy.
"Obviously there are opportunities and there are challenges for management to address, but we all know this is an important Canadian company and we certainly wish them all the best with the challenges that are in front of them," he said in Toronto.
"What I can say relative to this company is this particular sector is important to the government because it's obviously a high-tech, highly innovative sector and that's one of the things that we do have to encourage in terms of the economy of the future."
Co-CEOs Jim Balsillie and Mike Lazaridis have come under fire for the company's lacklustre response to the growing number of alternative devices on the market.
On Thursday, the executives responded by announcing plans to slash their salaries to $1 as they focus on returning the company to its former glory.
They pleaded for understanding.
"We ask for your patience and confidence," Lazaridis said on a conference call late Thursday.
RIM, which has been forced to cut 2,000 jobs this year, has watched as its PlayBook tablet offering landed on the market with a thud and also had to contend with a worldwide BlackBerry outage that cost it more than $50 million in revenues and tarnished its reputation.
RIM had also warned investors that it will book a US$485-million charge on the cost of discounting the price of PlayBooks by more than half to help boost sales. RIM announced it had only shipped 150,000 in the third quarter, not quite one million since it debuted in April.
