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RIM Boosts Subscriber Growth Outlook

Shares rise more than 8% on the news.

Updated from 8:04 a.m. EST

Shares of BlackBerry maker

Research In Motion

(RIMM)

surged Thursday after the company upped its subscriber growth estimates for the fourth quarter.

The company said it now expects its subscriber additions to be 15% to 20% higher than initially predicted, due to the popularity of its smartphones during the holiday season. Shares of RIM jumped $9.64, or 9.9%, to $107.55.

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On Dec. 20, RIM said quarterly net subscriber growth would reach 1.82 million, putting the revision in a range of 2.09 million to 2.18 million. The total BlackBerry subscriber base should reach 14 million at the end of the quarter, according to the company.

"BlackBerry smartphones proved to be a big hit throughout the holiday selling season, and we're pleased to see RIM's business momentum continuing in the new year," said Jim Balsillie, co-chief executive at RIM. "The seasonal slowdown in net subscriber account additions that we expected in the new year did not occur, and our focused execution with partners has continued to produce strong results within both enterprise and consumer segments."

Citigroup analyst Jim Suva said in a research note that the revised forecast "should allay recent investor concerns over potential demand slowdown, financial services layoffs, and potential channel inventories." The firm also reiterated its buy rating for the stock and a price target of $140.

"While we believe many investors view RIM as purely a 'momentum' stock based on the stock chart and valuation, we would argue that the true momentum is in RIM's fundamentals, as measured by growth in multiple categories including revenue, devices shipped, subscribers, operating income, net income and cash," the note added.

RIM, which is due to report fourth-quarter earnings on April 2, reiterated its expectations for earnings in a range of 66 cents to 70 cents a share on revenue of $1.80 billion to $1.87 billion.

The Thomson First Call average estimate is for a profit of 69 cents a share on $1.85 billion in revenue.

"With this positive preannouncement we see potential for sales and earnings-per-share upside when the company reports," Suva said.