Research In Motion Clinging to China Unicom BlackBerry Launch

Research In Motion (NASDAQ:RIMM) shares climbed today with news that China Unicom (NYSE:CHU) is launching Blackberry Internet Service for its smartphone customers, in spite of a report from MKM that Verizon (NYSE:VZ) has experienced unusually high warranty returns of BlackBerry 7 models.

Starting today, China Unicom is rolling out BlackBerry Enterprise Solution, which includes BlackBerry Torch and BlackBerry Curve 3G smartphones. It’s a big deal for RIMM, since China surpassed the U.S. to became the largest mobile market in the world by volume last November, according to a TechCrunch report, with 26 million new 3G users jumping on the bandwagon last year alone.

However, the coup is balanced by news that MKM Partners’ Michael Genovese today reiterated a Neutral rating on RIM shares and a $15 “fair value estimate,” but lowered his estimates for last quarter and this year. Genovese cited some “disappointing U.S. retail store checks” he’s done regarding the BlackBerry, particularly at Verizon Communications, said a Barron’s report.

According to Genovese, Verizon retail sales associates have said that they actually tell customers not to buy the BlackBerry 7, because warranty returns on both new and refurbished models are more than 10 percent and even as high as 20 percent. Many models reportedly lock up right out of the box. At non-Verizon stores, some sales associates reported to Genovese that “today’s Blackberry buyer is overwhelmingly already a user and very few new smartphone buyers choose RIM.”

Genovese lowered his estimate for the fiscal fourth quarter that ended in February to $4.3 billion and 80 cents a share, from a previous $4.75 billion and 90 cents. He cut his 2013 fiscal year estimate to $16.56 billion and $2.92 from a prior $17.66 billion and $3.62. He said he expects the stock to “trade down toward $10″ this year, but that his $15 target is already fairly “conservative,” according to the report.

To contact the reporter on this story: Gina Smith at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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