Analysts say RIM losing share faster than expected

Research In Motion is losing market share much faster than expected, warned analysts on Friday, a day after the BlackBerry maker gave a weak outlook in further proof that the company was not gaining ground on rivals Apple Inc and Google Inc.

Shares of RIM were down 22 percent in Frankfurt trading.

On Thursday, the company posted a sharp drop in quarterly profit and painted a dismal picture for its current quarter and said it now expects to reach only the lower end of an already reduced full-year outlook.

The North American market share losses persist and we believe this trend is starting to spread to international markets, starting with slow signs already in UK, Sanford C. Bernstein analyst Pierre Ferragu wrote in a note to clients.

The weak quarterly performance and bleak outlook posted by the one-time smartphone leader showed how far BlackBerry, once a byword for corporate communication, has fallen out of favor with both consumers and investors as Apple's iPhone and devices running Google's Android software take oversized bites out of the booming market, especially in the United States.

Analysts at National Bank Financial believe the earnings decline this quarter and in outlook signals more than just declining hardware margins associated with the failing PlayBook, and lower margins associated with handsets targeted at the prepaid segment.

Our view is the company is garnering lower profitability on its service revenue, which is the monthly infrastructure fee charged to carriers based on the number of active BlackBerry subscribers, National Bank analysts said, as they downgraded the stock to underperform from sector perform.

And yet RIM's management remains in blatant denial, said Bernstein's Ferragu, who believes the company's outlook for the third quarter and the full year appears unrealistic.

For instance, the co-CEOs do not recognize the failure of the Playbook and continue to sell its merits in terms of security, he said, noting that PlayBook tablet computers shipments fell from 500,000 to 200,000 units in one quarter.

RIM's co-Chief Executive Mike Lazaridis, in a conference call after the results, said he was confident that the company was on track to return to growth in the third quarter and beyond, while co-CEO Jim Balsillie promised a software upgrade he dubbed PlayBook 2.0.

(Reporting by Tenzin Pema in Bangalore; Editing by Maju Samuel)