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RIM's global market share may fall further: RBC

Embattled smartphone maker Research in Motion (RIM-T) will ship a lower-than-expected number of phones in the current quarter and is at risk of seeing its global market share slip below 5 percent, according to analysts at RBC Capital Markets.

RIM is now expected to ship 9 million smartphones in the current quarter -- well below the consensus estimate of 10.5 million, the analysts wrote in a note to clients on Monday.

The analysts say that if the company's global market share does slip below 5 percent it may find itself in a position from which it won't be able to recover. They estimate that RIM currently has a global market share of about 7.2 percent.

"Limited scale at that point can lead to shrinking operating margins and in our worst case scenario RIM may burn cash next year," Mark Sue says in a note to clients. "The good news is that RIM has no debt."

Sue lowered his rating on the company to "speculative risk" from "above average risk", citing "limited visibility to RIM's near-term fundamentals."

He says since the company announced in its last earnings report that it would no longer provide guidance and continues to face growing competitive pressures from market leaders such as Apple and Google, its shares are no longer trading on fundamentals.

"[They are trading] on the potential for value creating strategies: licensing, partnerships, joint ventures, and other strategic alternatives," he says.

He says that while the company's strong balance sheet will allow it time to tackle its current problems, that cushion won't last forever. It currently has more than $4 per share in cash and no debt.

"If subs [subscribers] go elsewhere and shipments drop below 6 million units per quarter, cash flow may turn negative," he says.

For the fiscal 2013 year, Sue expects RIM to bring in $13.7 billion in revenue and EPS of 96 cents, while the Street is estimating $15.3 billion in revenue and EPS of $1.95.

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