BlackBerry Maker in Profits Shock

The manufacturer of BlackBerry smartphones upset Wall Street by delivering below-par profits last night, sparking concern that the economic downturn could be causing cutbacks in technology spending.

Research in Motion announced a 72% jump in second-quarter profits to $495m. But the figure was below analysts' expectations and the Canadian company was cautious on its future profit margins.

The figures were released after the closing bell but in unofficial after-hours trading, RIM's shares slumped 15% in a rare setback for a once high-flying stock.

RIM's co-chief executive, Jim Balsillie, offered little hint of disappointment, describing the year as "extraordinary" for the company and its partners."Our enterprise business remains strong and our momentum in the consumer marketplace continues as we head into the holiday buying season," he said.

The technology firm, which is based near Toronto, sold 11m of its popular phones during the first half of the year in spite of vigorous competition from Apple's iPhone. Its second-quarter revenue was up 88% to $2.58bn.

RIM has struggled with a delay in the crucial US launch of its latest product, the BlackBerry Bold. Industry commentators said the company's prediction of a 47% gross margin in the next quarter was significantly short of anticipations.

"This is a surprise and not a positive one," said Peter Misek, an analyst at the Canadian brokerage firm Canaccord Adams. "Gross margin is way lower than we thought."

Since the device's launch in 1997, the BlackBerry's emailing capability has turned it into a must-have gadget in the business world. RIM generates much of its revenue from corporate accounts but the company has insisted it has seen little downturn resulting from the credit crunch and problems afflicting the financial services industry.