Amid all the speculation regarding blackberry ban in India and competitive threats from Apple Inc.’s (AAPL) iPhone, Research In Motion Limited (RIMM) acquired Cellmania, a California based company, which makes software used to run mobile phone software stores.
 
Cellmania caters to clients such as Sprint Nextel Corporation (S) and AT&T Inc. (T). Research In Motion intends to use Cellmania’s technology and expertise in its BlackBerry Application World. This acquisition may boost Research In Motion’s operating system, user interface and software ecosystem and place it at the same level with Apple’s and Google Inc.‘s (GOOG) Android operating system.
 
Research In Motion continues to face a challenging environment, which was reflected in its first quarter 2011 financial results. Total revenue was $4,235.4 million, which came below the company’s guidance. During the quarter, BlackBerry mobile phones failed to see any significant demand upsurge. Research In Motion shipped 11.2 million BlackBerry devices and added 4.9 million net new BlackBerry subscribers. Both figures were at the low end of the company’s guidance.
 
Research In Motion continues to face stiff competition from Apple’s iPhone and several newly launched smartphones based on Google’s Android operating system, especially Motorola Inc.’s (MOT) flagship DROID smartphone.
 
Nevertheless, robust growth of 3G smartphones throughout the world may benefit Research In Motion in the near future. The strong brand value of BlackBerry is also expected to keep the earnings momentum high for Research In Motion.
 
However, we also believe that Research In Motion desperately needs a mobile phone that can out perform iPhone or Android based-phones in the market. Failing which, the company will face serious problems about remaining competitive in a market, which is rapidly changing in terms of technology, price and data plan provided by the carrier.
 
We maintain our long-term Neutral recommendation for RIMM. Currently, it is a short-term Zacks #3 Rank (Hold).
 
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