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."

Despite showing sustained growth, RIM failed to blow away investors with its results or outlook, and it seems to have played a major factor in the stock's decline since earnings, agrees Lawrence Harris, an analyst with Oppenheimer. Oppenheimer does not own shares of RIM or have an investment-banking relationship with the company.

"You have a stock that trades at a relatively high price-to-earnings multiple and tends to be somewhat volatile," says Harris. "When a stock trades at 30 or more times earnings, you have to do extremely well and not just beat consensus but meet or beat whisper number," Harris says. "If you don't do that, a certain number of growth or momentum investors will sell."

Despite the selloff on Wall Street, RIM's fundamentals remain strong, say several analysts. The company shipped about 6.4 million devices during fiscal 2007 and added 1.02 million BlackBerry subscriber accounts in the quarter.

Nearly 80% of buyers of the much-hyped Pearl phone launched last year were new subscribers. Total subscribers for the company were 8.1 million, up 65% year on year, and international growth continued to be strong.

"The company continues to do well," says Harris. "But the fact is the revenues came in below analyst expectations, and the number of BlackBerry devices shipped was slightly lower than our estimates." RIM also faced a slight increase in its channel inventory, he points out.

During the fourth quarter, RIM shipped about 2 million handsets, compared with Harris' forecast of 2.1 million. Sell-through in the quarter was 1.75 million, meaning that channel inventories rose by about 250,000 units, he estimates.

With earnings behind it, there's little that could boost support for the stock, says Kelmon.

"One of the reasons for the decline is, between now and next quarter there are few catalysts for the stock," he says. And there's the Apple ( AAPL) iPhone scheduled to debut in June that has cast a halo over the smartphone segment.

RIM has scheduled an analyst meeting in the second week of May, and details about the company's plans or new phone models in the pipeline, such as the launch of the 8300 phone through AT&T's ( T) Cingular service by the end of May, could help lift the stock, expects Harris.

Until then, RIM could dip as low as $120 a share and then come back up to $125 a share if the market stays strong, believes Kelmon. "That's the place I would buy again," he says

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