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RIM , facing increasingly intense competition, is proving to be a stubborn fighter.

Canada's biggest technology firm posted record second-quarter profits yesterday, beating analyst expectations at a time when many observers were increasingly pessimistic about RIM's prospects of competing with tech giant rivals such as Apple Inc. and Google Inc.

Revenue during the second quarter grew 31 per cent year-over-year to $4.62-billion (U.S.), the company said. Earnings per share jumped 76 per cent to $1.46 over the same period last year.

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Analysts had expected earnings per share of $1.35 in the quarter and revenue of $4.47-billion, according to a Reuters survey.

RIM also shipped a record 12.1 million BlackBerrys during the quarter. By the end of the quarter, RIM said its BlackBerry customer base had grown to more than 50 million.

The Waterloo Ont.-based company is under growing pressure to prove it can compete with Apple's iPhone at the top end of the consumer smart phone market, and a slew of phones powered by Google's Android operating system at the bottom end. In recent quarters, RIM has seen its rivals make headway not only in the consumer market, but also in the enterprise section - where the Canadian comany has traditionally dominated.

Some of the channel checks show the Torch is No. 2 after the iPhone at AT&T as far as feature smart phones go... I think this is indicative - things were not as bleak as a lot of people were thinking. Ronald Gruia, Frost & Sullivan

The bulk RIM's new subscriber growth has come from consumers over the last several quarters. RIM executives positioned the most recent results as a strong lead-in to the important holiday shopping season.

"We expect a continuation of this momentum in the third quarter as we extend the rollout of new products, including the BlackBerry Torch, into additional markets and benefit from heavy promotional activities and increasing customer demand as we head into the holiday buying season," RIM co-chief executive officer Jim Balsillie said in a statement.

However, it was not all good news for RIM. The company added 4.5 million new subscribers during the second quarter, falling below street expectations of five million.

Sanford C. Bernstein Ltd. analyst Pierre Ferragu said one possible explanation for the weaker-than-expected subscriber numbers is that BlackBerry adoption is beginning to slow at a time when RIM is passing a lot more inventory on to its sales partners.

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"If this interpretation is right, in the next six months, reality catches up," Mr. Ferragu wrote in a note to clients. "Facing an inventory glut, operators freeze orders of new BlackBerrys," he wrote. "Guidance for next quarter [more than five million net new additional subscribers]may be far too optimistic."

Even if shares have a relief rally on results, we remain concerned on the competitive positioning for the company. BGC Financial analyst Colin Gillis

Still, some analysts took a more positive view. Even though Mr. Balsillie said the company hit some bumps in the first part of the quarter - such as sales hits in the Middle East and a lack of new BlackBerry models on the market - the company did see a bump later in the quarter with the release of its newest smart phone, the Blackberry Torch.

"Some of the channel checks show the Torch is No. 2 after the iPhone at AT&T as far as feature smart phones go," said Ronald Gruia, a technology analyst at Frost & Sullivan. "I think this is indicative - things were not as bleak as a lot of people were thinking."

RIM shares rose about 3 per cent in after-hours trading yesterday.

RIM-T 1-yr body chart

"Even if shares have a relief rally on results, we remain concerned on the competitive positioning for the company," wrote BGC Financial analyst Colin Gillis in a note prior to the results. "As an example, we mention signs we see that the carriers are positioning RIM as a secondary [product]in the smart phone landscape."

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While there has been no confirmation from the company, many analysts who cover RIM were waiting yesterday for one or more new product announcements leading into the busy holiday shopping season. Perhaps the most anticipated - but highly unlikely - product is RIM's rumoured tablet computer, the so-called "BlackPad." The company has never confirmed it is even working on such a product - which would rival Apple's ultra-successful iPad - but several sources have said the company had been.

In a conference call yesterday, Mr. Balsillie made no major new product announcements. However he did indicate RIM has an important announcement planned for its developer conference in San Francisco, which kicks off Sept. 25. However, he would only say observers will be "pleasantly surprised" by what they see.

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