Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) or Blackberry announced solid fourth quarter earnings; the company earned 22 cents a share on revenues of $2.68 billion. However analysts remain pessimistic about the BlackBerry maker. Yesterday, JPMorgan said that the company has a tough road ahead despite improved earnings.

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Now, the Berenberg Bank analyst Adnaan Ahmad said in his latest research report that he has a sell rating on the stock with $5 price target. That’s a bit shocking as Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) now (Blackberry) shares are trading above $15 per share. Ahmad said investors should ask where the sustainable profits will come from.

The company’s services division has been its traditional source of higher margins and cash flows. Unfortunately, the service business has lost 4 million subscribers in last two quarters. If the trend continues, it will be difficult for investors to put  a floor valuation on the stock. Perhaps that’s the reason the stock failed to show a big jump despite gross margins beating Wall Street expectations.

Hardware margins have also demonstrated significant improvements driven by higher ASPs and cost savings. According to Berenberg Bank’s calculations, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)/Blackberry’s service margins were 75-80 percent, software margins were 90 percent, while hardware margins stood in the 10-15 percentage range in the fourth quarter compared to break-even in Q3. Analysts estimate that Z10 gross margins were around 25-30 percent.

Analysts said that hardware margins will remain solid in the next two quarters on Z10 & Q10 sales, and 1 million unit order from Brightstar. But the basic question still remains: how sustainable is this? Can Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) compete consistently on the hardware-versus-hardware basis with Apple Inc. (NASDAQ:AAPL), Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) and HTC Corp (TPE:2498)? That’s something Ahmad has repeatedly said for the past three years.

About two years ago, the Berenberg Bank analysts told the former Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) management team that the Canadian smartphone maker should shut down or sell its hardware business and become a full-fledged service-oriented company. That way, the company could have sold its platform ware to iOS and Android ecosystem, and where BlackBerry would appear as an app. Yes, the hardware companies could cut 30 percent of services ARPU, but that would have been a highly sustainable business model.

Research In Motion may ultimately follow that path, but that opportunity is already being explored by Good Technology, Airwatch and Knox platform of Samsung. A big question looms over the sustainability of its hardware margins in the fiercely competitive hardware market. And Research In Motion Ltd. (NASDAQ:BBRY) (TSE:BB)/Blackberry’s services margins is shrinking by losing subscribers.

Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) shares were almost flat at $15.11 at 10:29 AM EDT.