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Things Aren't Looking Good for Research in Motion

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In March 2010, a study showed BlackBerry users were feeling the two-year-contract itch and were looking to defect to the iPhone or Android. A year and a couple lackluster smartphones later, Research in Motion is left further behind the smartphone technology curve.

Yesterday, RIM posted fourth quarter financials following the market's close. On the bright side, the Canucks had some good news to share. The manufacturer sold 14.9 million BlackBerrys -- which puts sales near the top of its projected range. Shipments for the entire year hit a record -- 52.3 million units -- making it a 43% improvement from the previous year. And earnings per share hit $1.78, beating analysts' estimates of $1.75.

But there was some bad news. Shake RIM's Magic 8-Ball and the display will read "Outlook not so good."

Aside from revenue falling $900 million short of the consensus estimate of $5.65 billion, RIM expects revenue for the current quarter to be between $5.2 billion and $5.6 billion -- not quite reaching analysts' estimates of $5.6 billion. The company also expects earnings of between $1.47 and $1.55 a share -- also falling short of the $1.65 per share analysts had estimated.

As a result, the stock sunk 10% in after-hours trading and is currently hovering around $57.60.

In a statement, the company addressed the less than rosy outlook:

"This guidance range reflects a mix shift in handset towards lower ASP products in the first quarter and an increased level of investment in research and development and sales and marketing related to our tablet and platform initiatives. The guidance range is slightly wider than normal to reflect the risk of potential disruption in RIM's supply chain as a result of the recent earthquake in Japan."

In other words, RIM's forthcoming products aren't up to snuff compared to iPhone and Android's lines, and there's little in the pipeline to believe it can adequately compete in the upper end of the mobile device market.

The problem is the same as it was a year ago: Research in Motion isn't innovating even on a fraction of a level that Apple and Google are. Cupertino has a stranglehold on a devoted fan base, Mountain View is flooding the market with exciting new devices and services, and Ontario? Well, it's no longer number one and its fleet of devices aren't looking so necessary even to the business lot.

Maybe if and when Windows Phone 7 starts creeping up on its tail, RIM will start pushing technology forward and give the average consumer something worth buying.

(See also: Why BlackBerry Users Will Defect and Android Is Now Number One)

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POSITION:  No positions in stocks mentioned.