The BlackBerry and the Damage Done: RIM Recovers from the NTP Suit, Plans for Future

Research in Motion concluded its six-year-long patent infringement case with NTP this week with a $612.5 million settlement. Followers of the case can breathe a collective sigh of relief that the battle has come to an end with the screens of their BlackBerrys still aglow. However, RIM is not out of the woods just yet.

In a recent press release, RIM acknowledged that the constant legal instability has significantly damaged business. The company also said that the uncertainty regarding the outcome of the NTP case seemed to have taken an even bigger toll on its fourth quarter earnings than anticipated, and it expects new subscribers for the fourth quarter to be between 620,000 and 630,000--well below the 700,000 to 750,000 range given in December 2005.

Revenue was said to be about $560 million, again below the $590 million to $620 million range in the first forecast. RIM will formally report earnings on April 6.

Telecom analyst Jeff Kagan summed up the thoughts of many who have been following the case in a recent press release, stating: ³It's about damn time. This problem has been festering for way too long. It has upset customers and hurt BlackBerry, but at least it is over."

Kagan added that RIM now has a new struggle-staying at the pinnacle of the corporate mobile e-mail market. Since the NTP dispute began, RIMıs competitors have been circling, waiting to take down the long-time leader.

Palm, for example, has issued the following statement in response to news media queries: ³We have long believed that a settlement between these two parties would be the eventual outcome. Palmıs partnerships with Good Technology and Microsoft are attracting a growing number of customers. In the U.S., we are gaining share of the smartphone market faster than any other supplier, including RIM. We think our momentum will continue as more and more companies understand and deploy our solutions.²

According to Kagan, "Competitors who have been salivating over the potential opportunity of gaining new customers if BlackBerry went down have to be disappointed, but this is a better ending for customers, companies and everyone.² Kagan also stated that although RIM appears to be in a vulnerable position for the moment, many believe that the company escaped from its struggles with NTP relatively unscathed, and that the company is still in good shape to expand its mobile business. The $612.5 million settlement was far below the $1 billion predicted by Wall Street, and that is a good sign for RIM.


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