Blackberry outage threatens troubled company

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Wednesday, October 12, 2011

Research In Motion Ltd. saw its shares take a hit Wednesday morning as reports of a growing outage of its flagship BlackBerry service threaten what many perceive as one of the troubled company’s key remaining assets.

The multiday outage began Monday in several markets throughout Europe, Asia and South America. The company said the cause was a “core switch failure” within its network that was compounded by problems with a backup switch. The company put up a blog post Tuesday stating that it was working to “restore normal service as quickly as possible.”

The problem has now spread to North America, with reports of users in the U.S. and Canada experiencing connectivity issues. In a statement Wednesday morning, RIM said that “BlackBerry subscribers in the Americas may be experiencing intermittent service delays this morning. We are working to resolve the situation as quickly as possible and we apologize to our customers for any inconvenience.”

Shares of RIM were down about 1.8% in morning trades to $23.97.

While a multiday outage is rare for the company, analysts say the stock reaction will likely be muted by the fact that RIM has already suffered a severe collapse in its market value this year, as growing competition in the smartphone market has forced the company to lower sales estimates. The stock has lost about 60% of its value since the first of the year.

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