Friday, December 19, 2008, 12:00 pm

Strong RIM guidance seen as positive for Apple

By Sam Oliver

Research In Motion painted a rosy outlook for its fiscal fourth quarter on Thursday, offering a positive read-through for rival smartphone maker Apple.

The BlackBerry maker said third quarter sales rose more than 66 percent, fueled by shipments of approximately 6.7 million mobile devices. It expects per share earnings of $0.83 to $0.91 on sales of $3.3 billion to $3.5 billion for its fiscal fourth quarter ending February, well ahead of analyst consensus estimates of $0.83 on $2.97 billion.

The company was able to net approximately 2.6 million new BlackBerry subscriber accounts during the third quarter but said it expects current fourth quarter additions to be even greater at approximately 2.9 million. This surprisingly strong guidance, which RIM attributed to new product demand, trends favorably for similarly-poistioned Apple, according to UBS analyst Manyard Um.

"Our checks continue to indicate operators are pushing newer devices at the expense of older handsets, which should be positive for Apple (3G iPhones are still new)," he wrote in a note to clients on Friday. "[The] main risk we see for RIM and Apple is end demand (given data plan requirement and economy slowing) and competition."

Still, the analyst believes current quarter iPhone sales will slip some 1.9 million units sequentially to 5 million units as Apple works down channel inventory. He's also concerned that the iPhone maker's above-average average selling price and gross margin will come under increase pressure as competition in the smartphone space intensifies.

Um maintained his Buy rating and $110 price target on shares of Apple, citing a lack of near term developments that would serve to move the stock, including Macworld.

"With notebooks, iPods and the iPhone all seeing fairly recent updates, we believe product announcements/enhancement will likely revolve around desktops and/or peripherals," he wrote. "We do not expect Macworld to be a material catalyst for Apple."

Shares of Apple were trading down $0.17 to $89.26 on relatively low volume Friday afternoon.