RIM shares rise on rosy fourth-quarter outlook

The fourth-quarter outlook, announced after markets closed on Thursday, reflects robust demand for a range of new consumer-targeted BlackBerries. Lower prices have helped to lift sales during the crucial December holiday season despite economic gloom.

The company expects sales of $3.3 billion to $3.5 billion in the fourth quarter and earnings of 83 to 91 cents per share. Analysts had expected revenue of $2.97 billion and earnings per share of 83 cents on average, according to Reuters Estimates.

RIM shares gained C$2.87 to C$49.60 on the Toronto Stock Exchange and $2.44 to $40.88 on Nasdaq early on Friday.

Strong holiday sales and new products are laying the groundwork for a "record number" of shipments in the fourth quarter, the company told analysts.

Paradigm Capital analyst Barry Richards said the only blemish was a gross margin forecast of 40 to 41 percent, down from 46 percent in the third quarter and 50 percent in recent years.

The company expects margins will match or better the fourth-quarter outlook through next year, he added.

"Low margins will trouble many in the market and will be a drag on near-term earnings," he wrote in a note. "Fortunately, revenues are surprisingly robust and dispel a number of fears related to shipments and demand for BlackBerries."

UBS said that management hinted it was "layering in some conservatism" in its forecast.

Analysts Jeffrey Fan and Maynard Um said the forecasts were surprisingly strong, but cut their earnings per share estimates largely on the lower gross margin. They also reduced their stock price target to $42 from $50 to reflect ongoing risks.

($1=$1.22 Canadian)

(Reporting by Susan Taylor; editing by Peter Galloway)