06/16/2011 07:53 EDT | Updated 08/16/2011 05:12 EDT

RIM, Blackberry Maker, Should Start With 'Clean Slate': Analyst

THE CANADIAN PRESS -- MONTREAL - Expectations are high that Research In Motion will spell out how it will fend off competition from Apple and Android smartphones with a new generation of BlackBerrys when it reports its latest quarterly financial results.

"They should just take a hair cut and then try to start building some investor confidence," said technology analyst Sameet Kanade of Toronto-based Northern Securities Inc.

RIM, which cut its financial guidance for both earnings and revenue in April, reports its first-quarter results after the close of markets Thursday.

"I'd like them to start off with a clean slate and get all the negative news out there -- throw everything into the sink," Kanade said.

Shares in the company fell more than 10 per cent after the April warning that it expected to sell fewer BlackBerrys at lower prices in the quarter as it moved to newer smartphones.

RIM shares, which had traded for more than $65 earlier this year, closed down 27 cents at $34.46 on the Toronto Stock Exchange on Wednesday.

Investors have called for a change to RIM's management structure, saying there should be only one chief executive and an independent chairman of the board.

Blackberry inventor Mike Lazaridis and Jim Balsillie, who is responsible for corporate strategy, business development and marketing, are co-CEOs and co-chairmen of the company.

Lazaridis, who is "most technologically adept," should be the CEO, Kanade said.

Kanade also said RIM's transition to new BlackBerry phones with the same operating system as its PlayBook tablet is key. BlackBerrys with the more powerful QNX operating system are expected to be out in early 2012.

"I think it's make or break for these guys."

UBS analyst Phillip Huang said investors need more information on RIM's competitive position.

"While the stock has sold off hard, we await clarity on how RIM intends to fend of mounting competitive pressure while managing a complex hardware-operating system transition," Huang wrote in a note to clients.

Huang is not a fan of the company's management structure either.

"We are also not convinced the current management structure -- co chairmen, who are also co-CEOs, and one of whom is now CMO (chief marketing officer), is the optimal one either."

William Blair & Co. analyst Anil Doradla said RIM is continuing to lose market share in the competitive North American market to Apple's iPhone and smartphones that use Google's Android operating system.

"As a result, RIM did not have a smartphone in the top three position at any of the four major North American carriers," Doradla wrote in a note to clients.

"Additionally, during the quarter RIM saw significant price cuts at AT&T and Sprint."

BMO Capital Markets analyst Tim Long, still bullish on RIM, said he still believes the company's stock to be "dramatically" under valued and expects neutral or positive guidance to be met with skepticism.

"We believe the value of the RIM network, recurring revenue stream and owning the operating systems are all being overlooked," Long said in a note.

RIM has said it expected to earn between US$1.30 and $1.37 per diluted share for the first quarter of its 2012 financial year, which ended May 28. That was down from earlier guidance for a profit of US$1.47 to $1.55.

Revenue was also expected to be slightly lower than its guidance for between US$5.2 billion and US$5.6 billion.

The average analyst revenue estimate for the quarter was $5.19 billion, while the average expectation for earnings was $1.33 per share, according to data compiled by Thomson Reuters.

Analysts have estimated that RIM shipped between 12.6 million and 13.6 million BlackBerrys and about 500,000 PlayBooks tablets in the quarter.