SHARES in Research In Motion Ltd, maker of the BlackBerry e-mail phone, have fallen as much as 20 percent in European trading after competition from Apple Inc's new iPhone curbed its profit forecast for the second quarter in a row.

Earnings will be 89 US cents to 97 US cents a share in the third quarter, hampered by the cost of building more advanced devices and selling them at lower prices, Research In Motion said on Thursday.

Analysts in a Bloomberg News survey had predicted earnings of 99 US cents on average for the period, which ends on November 29.

The company is battling a challenge from the iPhone and other competitors with four new models, boosting development and marketing costs. The iPhone's US$199 price tag may limit how much Research In Motion can charge for its latest products, making them less profitable than older models.

Gross margin, or the percentage of sales left after production costs, will drop to 47 percent in the current period, from 50.7 percent last quarter.

"The gross margin is a nightmare," Peter Misek, an analyst with Canaccord Adams Inc in Toronto, said in an interview with Bloomberg Radio. "We certainly didn't expect that."

Shares in Research In Motion, based in Waterloo, Ontario, fell as much as US$19.69 to the equivalent of US$77.84 in German trading from the close of US$97.53 on the Nasdaq Stock Market on Thursday.

If that decline holds upin United States trading, it will be the biggest one-day drop since March, 2001.