Research In Motion Ltd. Co-Chief Executive Officer Jim Balsillie said the BlackBerry maker is reducing supply costs as surging growth provides him with leverage to press for bargains during the recession.

“Being a strong growth company in a challenging environment makes you an important customer,” Balsillie said in an interview at his office in Waterloo, Ontario. That is probably helping RIM to elicit better terms from the companies that make equipment for its BlackBerry phones, he said.

Shrinking expenses, coupled with fresh sources of revenue such as the App World application store, may help the device maker bolster profit margins and thrive in the worst global recession since World War II. RIM has offered discounts on the Storm and other new models to attract customers reluctant to spend as they wait out the slowdown.

This month, RIM said gross margin, the percentage of sales left after production costs, will expand this quarter, signaling the company is absorbing the impact of introductory offers. Before that, the stock had dropped about 12 percent over two months as investors fretted about the effect discounts would have on margins, following RIM’s February prediction that fourth-quarter profit would come in at the low end of targets.

“Their volumes are increasing by leaps and bounds, which has to increase their purchasing power,” said Nirav Parikh, senior vice-president and equity analyst at TCW Group Inc. in Los Angeles. “The margin step-down has already occurred and the stock has been punished duly.” TCW has about $110 billion worth of assets under management, including RIM shares.

Stock Performance

RIM rose $2.27, or 3.7 percent, to $64.18 in Nasdaq Stock Market trading on April 9. Apple Inc., maker of the rival iPhone, climbed $3.25 to $119.57.

RIM’s five biggest suppliers account for almost 90 percent of its production costs, according to data from relationship- mapping software Connexiti. Electronics manufacturer Elcoteq SE makes up a third of RIM’s costs and relies on the company for 20 percent of annual sales.

(Bloomberg.com)