Marvell Technology Inc (MRVL)

[Lakers_w]

Pearl Flip w/ T-Mobile 9/10, Storm w/ VZ Oct, Bold w/ T
http://www.businessweek.com/technology/content/sep2008/tc20080925_105717.htm?chan=technology_technology+index+page_top+stories

RIM added 2.6 million subscribers and sold 6.1 million units as consumers in growing numbers ditch conventional cell phones for smartphones that handle e-mail, text messaging, and Web navigation.

On a conference call with analysts, co-CEO Jim Balsillie conceded that some of the company's newer products will cost more to produce. RIM announced its first flip phone, the Pearl Flip, (BusinessWeek.com, 9/11/08) with T-Mobile (DT) on Sept. 10. It unveiled its first 3G phone, the BlackBerry Bold, with AT&T (T) before that. And a new device called the Storm, said to be a touchscreen device similar to Apple's iPhone, is expected to debut with Verizon Wireless (VZ) in early October.

Over time, RIM will reduce the production costs on those handsets and make them more profitably, which should restore gross margins to higher levels, Balsillie said. "We feel very good about the long-term gross margin picture," he said.

Targeting New Smartphone Users
He added that the company needs to act fast to win customers who are upgrading to smartphones. "Strategically, it's going to be about adoption right now," he said. "As you assess this business and get close to it, you see there is a massive disruption going on. It's all about catalyzing adoption through this stage and into the next couple quarters.…If we give up ground now for short-term gratification, that's not in the interests of our shareholders. Not even close."

Even as the cost of making devices goes up, wireless carriers are coming under increasing pressure to cut the subsidies that they have traditionally paid manufacturers like RIM and Apple.

RIM's stock had risen 82¢ to 97.53 on Sept. 25, but it was still down more than 34% from a recent multimonth high of 147.55 on June 19. Much of the drop had been fueled by concerns about competition from Apple and worries about increased costs, as well as news of spreading financial contagion among Wall Street firms that employ legions of BlackBerry users.

RIM ended the quarter with 19 million active subscribers, and said it expects to add 3 million new users in the current quarter. The challenge now is for the company to add those customers more profitably.