Sector Snap: Shares of handset makers mixed

NEW YORK - Shares of BlackBerry maker Research in Motion Ltd. advanced Tuesday as Nokia Corp. declined. A BMO Capital Markets analyst initiated coverage of the companies with an "Outperform" and "Underperform" rating respectively.

In a note Tuesday, BMO analyst Tim Long singled out RIM as "the best way to invest in the rapidly growing, highly profitable smart phone industry."

Despite rising competition for the Waterloo, Ontario-based company, Long said RIM's "value proposition is unmatched."

Long said he is concerned that Nokia, based in Finland, does not have the compelling new devices to keep up in a more crowded market.

He projected annual earnings at 73 cents per share for 2009 and 98 cents per share next year. That is well below the average forecast of 85 cents and $1.20, according to Thomson Reuters.

"We expect the stock to be under pressure as estimates are lowered," Long said.

Nokia shares slid 42 cents, or 2.8 percent, to $14.59 in afternoon trading, while RIM jumped $2.16, or 2.7 percent, to $82.75.

Long also started coverage of Motorola Inc. and LM Ericsson Telephone Co. He rates both "Market Perform."

He expects Sweden-based LM Ericsson to maintain a leading market position in wireless infrastructure but said, "Gains from traditional competitors should start to become more than offset by losses to Asian vendors."

Shares of Motorola, based in Schaumburg, Ill., should trade in a narrow range as investors wait for the company to split off its cell phone division into a separate company, Long said. Motorola has not given a specific time frame for the spinoff, though it originally expected the split in the third quarter.

Motorola shares dipped 2 cents to $6.59 and LM Ericsson fell 5 cents to $9.80.

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