RIM shares fall in premarket on delay of key phone

NEW YORK (AP) — Shares of Research in Motion Ltd. plunged 17 percent before Friday's opening bell, after the BlackBerry maker said it will delay the launch of critical new phones and revealed that its business is crumbling faster than thought.

The Canadian company posted results Thursday for its latest quarter that were worse than Wall Street had expected. It's cutting 5,000 jobs and it surprised analysts by announcing it would delay the launch of its new operating system, BlackBerry 10, which CEO Thorsten Heins has said was crucial to the turnaround of the company.

The phone will be delayed until after the holiday shopping season, which is a period of high sales for phones.

North Americans are abandoning BlackBerrys for iPhones and Android phones, which have made the BlackBerry look like ancient technology.

Jefferies analyst Peter Misek backed his "Underperform" rating for RIM and cut his price target in half to $5, saying that it's unlikely that the company will be acquired before the BlackBerry 10 launches.

Meanwhile, the company's margins will suffer in the second half of the year as a result of the lack of new products.

"We believe the BlackBerry 10 push out decision was recent and leaves RIM with inferior products in an increasingly competitive and saturated smartphone market," Misek wrote.

Sterne Agee analyst Shawn Wu backed his "Neutral" rating for the company, saying that at this point it needs to focus on staying afloat.

"We believe the company needs to be careful with its cash or risk facing bankruptcy," Wu wrote in his note.

RIM shares fell $1.51 to $7.62 in premarket trading.