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RIM With a View

In the end, it was the sky-high expectations that did Research In Motion (RIMM) in.

The maker of the BlackBerry phones posted lighter-than-expected fourth-quarter results Wednesday and said it is now the target of a formal investigation by the Securities and Exchange Commission over its stock option grant practices.

Also, the company's guidance was cautiously optimistic .

RIM's stock took a hit on the news. On Thursday, disappointed investors sent shares of the company down $11.10, or 7.6%, to $134.97.

The expectations were too much for RIM to handle, says Matt Kelmon, portfolio manager with Kelmoore Investment Company, which has a position in RIM.

"We saw more than a 20-point rise in the stock from mid-March, and unless there was some absolutely fantastic news and huge, huge earnings, RIM's rise would be unsustainable," he says.

For the fourth quarter, revenue jumped 66% to $930.4 million from $561.2 million a year earlier. The company posted earnings of 99 cents a share.

Analysts were looking for earnings of $1 a share on revenue of $935.4 million.

"Still, a 66% rise in sales is absolutely fantastic, and their subscriber numbers remain strong but the numbers were lighter than what analysts had been looking for," says Kelmon. "So it's about whether you want to view the glass as half full or empty."

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