RIM's Indigo a Likely Mood-Changer - TheStreet

RIM's Indigo a Likely Mood-Changer

Its new family of mobile products should help the BlackBerry maker get its trading groove back.
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Updated from 11:21 a.m. EST

If

Research In Motion's

(RIMM)

spate of recent good news is an indication of things to come, its hecklers might have to do an about-face.

Last week, the BlackBerry maker came out tops among PDA makers in a Gartner research report and even settled its

lawsuit against

Samsung

over its BlackJack phone name.

On Monday, the Ontario, Canada-based handheld device maker released its much-awaited successor to the Pearl.

RIM announced the first in its BlackBerry 8800 phone series, a device code-named Indigo. The device will be offered by

AT&T

(T) - Get Report

starting Feb. 21.

Shares of RIM were recently trading at $133.41, down 80 cents, or 0.6%.

The debut of Indigo could help RIM break out of the price range of $128 to $137 that it's been stuck in since the beginning of 2007.

"Indigo is an important evolution because it offers refinements that make it probably more attractive to business users who also want a device to suit their personal needs," says Michael Abramsky, an analyst with RBC Capital Markets.

"It is also a step-function change in form factor and usability," says Abramsky, whose firm makes a market in RIM shares.

And according to RIM's own outlook, the timing seems right.

The company is targeting the end of its current, or fourth, quarter and its early first quarter for its new product launches, CFO Dennis Kavelman said during RIM's third-quarter earnings conference call in late December.

"We expect hardware shipments to be over 2 million units and to be a larger percentage of sales in Q4 due to the ongoing ramp of Pearl, existing customer demand for replacement and upgrade devices, and new products that we are planning on launching," Kavelman told analysts.

Strong Signals

Though RIM's stock has been flat in the two months since the third-quarter report, the stock has risen more than 95% in a year.

In addition to AT&T, customers for the 8800's initial launch is likely to include

Rogers Communications

(RG)

, one of Canada's largest telecom service providers. Rogers is expected to start offering the device starting early March.

RIM also plans to have a party for AT&T Cingular customers in New York on Feb. 20.

"RIM is having a special event similar to when the BlackBerry 8700 was released

in November 2005," says Steve St. Pierre, editor of

BlackBerry Cool

, a Web site that focuses on news related to the device.

The timing of the Indigo launch will likely determine whether RIM comes in at the higher or lower end of revenue guidance of $900 million to $940 million; consensus is for $927.2 million in sales.

Indigo is targeted at RIM's core business customers, compared with the BlackBerry Pearl, which is tailored to consumers. Additionally, Indigo has the trackball feature borrowed from the Pearl, but it sports a full QWERTY keyboard.

RIM is betting on the appeal of that feature both to business users and to those wanting to trade up from their existing RIM handsets.

Subscriber account additions, largely stemming from Pearl and Indigo, in the fourth quarter are expected to be in the range of 950,000 to 975,000.

The launch of the Indigo is likely to be followed a few weeks later by "Crimson," next up in the 8800 series. Crimson is likely to have a camera and Wi-Fi capability, features that are not expected to be included in Indigo.

According to Gartner, mobile data access, particularly wireless email, drove the worldwide PDA market up 18.4% to 17.7 million units in 2006.

RIM was the market leader, shipping more than 1.8 million BlackBerry devices in the calendar fourth quarter of 2006, with an estimated 915,000 considered to be PDAs and the remainder being smartphones.

RIM's product mix, says Gartner, has been shifting in favor of smartphones after the September launch of the BlackBerry Pearl.

PDAs, as defined by Gartner, are data-first, voice-second devices, such as the BlackBerry 8707v,

Nokia's

(NOK) - Get Report

E61,

Motorola's

(MOT)

Q and

T-Mobile's

Dash and Sidekick 3.

The smartphone is the reverse: The phone is its primary function, and it is designed for one-handed operation, as in

Palm's

(PALM)

Treo 750v, the BlackBerry Pearl and Nokia's E60.

The settlement with Samsung, according to RIM, includes limitations on use of the BlackJack trademark by Samsung, withdrawal of the trademark application for BlackJack and "certain reasonable measures to avoid confusion in the marketplace."