Research In Motion: PlayBook May Have Flopped but New QNX Devices Could Surprise

BlackBerry makers, Research In Motion Ltd. (NASDAQ:RIMM), could surprise people with its QNX-based devices that may guide the Canadian company to better fortunes, according to a Wall Street analyst.

Brigantine Advisors analyst Kevin Dede said that although the near-term looked difficult for RIM, its new QNX-based devices could lead to a revival of fortunes. The company is betting heavily on its PlayBook, while also planning to launch new smartphones next year, using the same QNX-based operating system used in the tablet.

Indications of the release time have surfaced regarding RIM's next generation of devices based on its new QNX-based operating system. While we believe the PlayBook shines as an example of the lukewarm reception we believe these devices could receive, should market demand come in much stronger than our expectation, RIM's business could return to past levels, Dede wrote in a note to clients.

RIM said last Friday it will record a charge in the third quarter related to the inventory valuation of its BlackBerry PlayBook tablets. The company also said it expects to sell less BlackBerry smartphones in the fourth quarter than in the third quarter and no longer expects to meet its earnings guidance for fiscal year 2012 that called for adjusted earnings of $5.25 to $6.00 a share.

In addition, the company said it had a high level of BlackBerry PlayBook inventory and believes an increase in promotional activity is required to drive sell-through to end customers.

PlayBook is losing to competing devices like market leader Apple's iPad and other Android tablets, like the Samsung Galaxy Tab. In addition, RIM lacks an ecosystem and is still struggling to convince developers to build apps for PlayBook and its upcoming smartphones. On the other hand, the iPhones and Android devices already boast huge libraries of applications.

While we believe RIM's outlook is dim, the overhang of an uncertain environment leaves us even less confident in forecasting growth. However, our view could prove wrong as demand for new BlackBerry devices could come regardless of the difficult environment, said Dede, who has a buy rating on the stock.

Shares of the Waterloo, Ontario-based company closed Monday's regular trading session at $17.02 on Nasdaq.