Nov. 5 (Bloomberg) -- Research In Motion Ltd., maker of the BlackBerry phone, plans to repurchase as much as $1.2 billion of shares to compensate investors as revenue growth slows amid stiffer competition.

The company may buy as many as 21 million shares, or about 3.6 percent of its stock outstanding, according to a statement today. The purchases may start on Nov. 9. RIM said it hasn’t bought back any shares in the past 12 months.

RIM forecast third-quarter sales in September that fell short of analysts’ projections, a sign the company may have to sell more phones at lower prices to compete with Apple Inc.’s iPhone. While competition is intensifying with the arrival of a slew of phones based on Google Inc.’s Android software, RIM has managed so far to increase its market share.

RIM, which released new versions of its BlackBerry Curve handsets in the third quarter, claimed 19 percent of the market for smart phones, up from 14.6 percent a year earlier, according to Framingham, Massachusetts-based IDC.

“They don’t see any major acquisition on the horizon so the best way to reward shareholders, or the best return, is a buyback,” said Nick Agostino, an analyst at Research Capital Corp. in Toronto. He recommends buying RIM shares.

RIM is also taking advantage of a slump in its stock price. The shares have dropped by a third since reaching a 2009 high of $85.77 on Sept. 23.

RIM’s board said the buybacks won’t affect the company’s ability to “execute its growth plans given the strength of RIM’s balance sheet and expected cash flow generation over the next several quarters.”

“The company is saying they believe, like I believe, that they are undervalued,” said Agostino. “Over time we’ve seen a nice recovery in their shares following their buybacks.”

RIM, based in Waterloo, Ontario, rose 18 cents to $57.79 at 4 p.m. New York time on the Nasdaq Stock Market.

To contact the reporters on this story: Ville Heiskanen in New York at vheiskanen@bloomberg.net; Hugo Miller in Toronto at hugomiller@bloomberg.net

Last Updated: November 5, 2009 16:21 EST