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By Jeremy Glaser | 06-17-2011 12:19 PM

Is the BlackBerry Doomed?

Research in Motion's disappointing results highlight how far behind the BlackBerry has fallen, but the firm has the resources to avoid fading into obsolescence, says Morningstar's Joe Beaulieu.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser.

Shares of Research In Motion tumbled today after the firm missed earnings estimates.

I'm here today with senior analyst Joe Beaulieu to take a close look at that company and also get an overview of the handset market.

Joe, thanks for joining me today.

Joseph Beaulieu: Thanks.

Glaser: So let's first talk a little bit about Research In Motion. So what news did they report today and why did the market react so negatively to it?

Beaulieu: Last night, they reported earnings, and their earnings were generally in line with the earnings warning that they issued about a month ago. But I think the reason why the stock is tumbling today is that their guidance for the rest of the year is weak, and they don't really have a credible turnaround plan.

Glaser: So do you think that RIM is going to be able to come out with new devices, that they're going to be able to compete again in this space, or are they in a terminal decline at this point?

Beaulieu: They don't have to be in a terminal decline. They certainly have the resources to turn themselves around. They have more than $5 a share in cash, the balance sheet is strong, they have no debt, they have good relationships with the carriers, they have a good patent portfolio. So, there's no reason why they shouldn't be able to turn around, except for a lack of vision from the management.

Glaser: Now, where have they been seeing success? Is there any place where the devices are doing better?

Beaulieu: They're seeing lots of growth overseas, especially in emerging markets, and they're even starting to get some traction in prepaid plans in the U.S. So, my concern is that the BlackBerry is gravitating toward the low end of the smartphone market, and that makes sense given that they don't yet have a product that's competitive with the high-end Android devices and the iPhone.

Glaser: Now one of the areas that RIM tried to make a big splash was in tablets with the PlayBook. Has that been a factor for them at all?

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