Investors dump RIM as Apple launches iPhone

TORONTO (Reuters) - Investors dumped shares of BlackBerry maker Research In Motion Ltd. (RIM.TO)(RIMM.O) on Tuesday, spooked by the entry of Apple Computer Inc.'s (AAPL.O) iPhone into the fiercely contested smartphone market.

RIM, whose shares have soared on the success of its consumer-aimed and multimedia-heavy BlackBerry Pearl handheld e-mail device, was down C$12.82, or 7.7 percent, at C$154.01 on the Toronto Stock Exchange. The stock also shed $11.16, or about 7.9 percent, to $131.00 on Nasdaq.

Research Capital analyst Nick Agostino said investors were reacting to the potential for a tough battle for high-end consumers between Apple and the smartphone makers such as RIM, Nokia (NOK.N), Motorola (MOT.N) and Palm (PALM.O).

"Obviously, there is that level of uncertainty," Agostino said. "We won't find out for another six months what real impact (the iPhone) is going to have in the channels."

RIM has tied the future of its growth in part to breaking into the large and lucrative retail market to diversify its business from the segment that caters only to large corporations and other professional users.

To that end, it launched the music-playing and photo-taking Pearl. Rumors of two more RIM devices in the same vein -- the Indigo and the Crimson -- are swirling on fan Web sites and among analysts.

But the launch of the iPhone could turn consumer-market expansion plans into a tough slog for Waterloo, Ontario-based RIM, some analysts say.

"The iPhone will be a stiff competitor in terms of the consumer marketplace," said Lawrence Harris, an analyst at Oppenheimer & Co. Inc., adding that Apple's move has the potential to shake RIM's often volatile share price.

"Apple is going to certainly go after the high-end consumer portion of the market and a lot of investors had been assuming that Research In Motion would be successful ... in moving beyond their core business customers and into the consumer marketplace."

RIM wasn't alone in retreating on Tuesday. Palm, which makes the Treo line of smartphones, fell 84 cents, or 5.7 percent, to $13.92 on Nasdaq.

Mobile phone giant Nokia lost 26 cents to $19.38 in New York, and Motorola shed 34 cents to $18.26.

While competition appears poised for a spike, both Agostino and Harris pointed to the pricing of the iPhone -- at $499 for the four-gigabyte device -- as high.

"If you're targeting the consumer market specifically, then obviously consumers tend to be more price sensitive," Agostino said. "I've got to question the early-day pricing strategy here."

While smartphones like RIM's ubiquitous BlackBerry have gained widespread acceptance among corporate executives -- lawyers, doctors and other professionals -- it has yet to breach the broad acceptance enjoyed by cheaper mobile phones that don't offer e-mail services.

Cost -- even with RIM's Pearl, which launched at $199 -- has been an often-cited reason.

Harris suggested Apple may be pricing high to try to ensure that it doesn't hurt sales of its digital music player, the iPod.

($1=1.18 Canadian)