RIM Stock Surges After BlackBerry Deal

Shares of Research in Motion Ltd. (RIM) surged to a five-month high Monday after it settled a patent dispute last Friday that averted a shutdown of its BlackBerry service in the United States.

RIM shares rose as high as 16 percent to C$94.49, their loftiest since September last year, and were at C$93.25 on the Toronto Stock Exchange, up 12.13 percent, in afternoon trading. On Nasdaq, the stock jumped $10.09, or 14 percent, to $81.97.

Still, the shares are off a year-high of C$105.39 hit last June, as analysts awaited new products from RIM and as attention turns to its competitors, including Palm (PALM) and Nokia (NOK), who are making versions of the Canadian company's popular and reliable wireless e-mail handsets.

"There's a flurry of activity in the shares today, but it's going to settle out, it'll find a new level and the focus is going to be on the sustainability of RIM's competitive position," said Rob Sanderson, an analyst with American Technology Research.

"It'll be a more normal debate than what went on in the courts."

Waterloo, Ontario-based RIM said Friday it had agreed to pay $612.5 million to U.S. patent-holding company NTP Inc. to resolve a four-year dispute that will allow RIM to continue with its service to some 3.2 million U.S. subscribers.

The agreement came after intense pressure from a U.S. court to strike a deal or face a possible injunction.

The acrimonious fight took a toll on the Canadian company's bottomline, and RIM cut its profit forecast for the quarter.

The company said customers had delayed buying BlackBerrys, the handsets popularized by executives typing emails with their thumbs while on the go.

"With the litigation now behind us, we believe investors will now focus on the fundamentals - particularly around the issues of market size, subscriber growth, and competition," Robert Dennison, analyst at UBS Investment Research, said in a report Monday.

"From a fundamental standpoint, we expect subscriber growth to ramp in the coming quarters, largely from pent up demand, as we believe enterprises held off purchasing BlackBerrys pending the outcome of the litigation," he added.

Canaccord Capital analyst Peter Misek dismissed the warning as "immaterial" and downplayed worries that RIM's market-leading position is under immediate threat from competitors.

"During all this big hullabaloo, you didn't see a single competitor announce a major customer win," he said. "The second thing is that not a single customer switched or decommissioned."

Misek said buyers' pent-up demand for BlackBerrys, as they waited out the court battle, was positive for RIM.

"Perversely, the lawsuit highlighted how much better and technologically advanced their products are," Misek said.

Indeed, he doesn't see much real competition for RIM in the next 12 to 18 months.

"After that, who knows," Misek said.

In the meantime, analysts have their sights on an electronics trade show to be held in Germany on Friday, where they expect RIM to unveil a new multimedia BlackBerry, as well as on RIM co-CEO Jim Balsillie's comments that the company will announce "a raft of launches and partnerships" over the next 30 days.

"I think as these device announcements that we're expecting out of RIM emerge, the stock is going to continue to move higher," said Misek.

Shares of Palm Inc., whose Treo phone might have benefited from a shutdown of BlackBerry service in the United States, fell more than 6 percent Monday to $39.33 on Nasdaq.