Research In Motion fell 18 percent in Nasdaq trading last week, after saying its profit and gross margin, or the percentage of sales left after production costs, would both be toward the bottom of its previous forecast in the fiscal fourth quarter.

“Some of it was permanent, some of it is temporary, and we see lots of ways to earn that back and we invest to earn that back,” Balsillie, 48, said in an interview at the Mobile World Congress in Barcelona yesterday.

Research In Motion is offering discounts on its new touch- screen Storm to broaden its appeal beyond business users and take market share from Apple Inc.s iPhone. The Waterloo, Ontario- based company started a “buy-one-get-one-free” offer earlier this month with Verizon Wireless.

Last weeks announcement suggested the latest models, such as the Storm and the Bold, won fewer customers than some of the older BlackBerry models, according to analysts including Scott Pope at First Analysis Corp. in Chicago.

The Storm, introduced in November for $199.99, is now sold for $99.99 with a service plan on Amazon.com Inc., the worlds largest online retailer.

Research In Motion, which shipped its 50 millionth BlackBerry in January, plunged 15 percent on the Nasdaq Stock Market on Feb. 11 on concern about the margin outlook. The stock has risen 20 percent this year, closing at $48.51 last week.

Irrelevant

“If we didnt have the market share growth, if we didnt have the sales acceleration, if we didnt have the subscriber acceleration, I might be concerned,” Balsillie said. “If sales are going up and were gaining market share, the stock market is irrelevant.”

Research In Motion said last week the number of new subscribers will be 20 percent higher than the 2.9 million forecast in December as buying levels remained “strong” after the Christmas season.

The company faces possible competition from Palm Inc.s plan to introduce the touch-screen Pre phone in the first half of this year. Demand for so-called smartphones, which allow users to surf the Web, stream video and send e-mails, is forecast to grow this year even as overall mobile phone sales shrink, according to research firm IDC.

The market for smartphones will expand 8.9 percent worldwide in 2009, compared with a 1.9 percent drop for the rest of the handset industry, research firm IDC predicts.

Analysts including Rob Sanderson of Broadpoint Amtech Inc. and Mike Abramsky at RBC Capital Markets predict profitability will recover later this year as handset sales growth accelerates and new products like the Storm and Bold continue to be introduced in new markets.

“The macro environment is challenging but RIM products are selling well,” says San Francisco-based Sanderson, who recommends buying the stock.

Balsillie is optimistic about Research In Motions prospects amid the global slowdown in demand for mobile-phones.

“You have to pay attention to the broader context, but were prospering and wireless has become a necessity for businesses and users,” Balsillie said. “These are uncertain times, unique times, but we are super fortunate to be a sector that has very special attributes for people and for business, and that it is essential. Our business is strong and our margin structure is intact.”

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