Decreased sales of Research in Motion's flagship BlackBerry line sent its shares tumbling Friday by 21 per cent on the Toronto Stock Exchange, as experts continue to muse whether the company has staying power in a highly competitive market.

Within minutes of the stock market open on Friday, RIM shares dropped from $34.37 to $28.98, and according to Business News Network analyst Michael Kane, 1.5 million RIM shares traded hands in that time.

The share price had dropped slightly further to $27.24 by the time the markets closed later in the day – its lowest level in five years -- with 18.6 million shares being traded Friday.

One of the company's largest investors, Jarisloswky Fraser, reportedly sold half its RIM stock.

The selloff came a day after the Waterloo, Ont.-based company released its quarterly report, which showed sales lower than those of the same period last year.

Analysts weighed in on RIM's changing fortunes. Tech expert Marc Saltzman said the firm is "not releasing enough innovative product" to stay competitive.

"RIM has to pull up their socks," he said on CTV's Power Play. "It's a much more competitive space now."

Kane noted that the BlackBerry line has been losing market share to the iPhone and Google's Android phones.

RIM's first-quarter profit, US$695 million, met analyst expectations – but only after decreased financial projections it released in April. It made $1.33 per diluted share on $4.91 billion in revenue.

A year ago, the company posted a profit of $769 million, or $1.38 per diluted share on $4.24 billion in revenue.

Ian Lee, a professor at Carleton University's Sprott School of Business, said one of the company's problems is that it's facing off against companies like Apple, that arguably place a higher priority on the slick design of its devices.

Smartphones are becoming "more and more of a fashion statement," Lee said Friday afternoon. "I'm not so sure that RIM understands that, not withstanding that they make an outstanding product."

Analysts at National Bank Financial say they expect RIM sales to continue to underperform for the rest of the fiscal year.

"We're lowering our estimates significantly," wrote National Bank analyst Kris Thompson. "We believe the smartphone sector is moving into a new paradigm of lower margin pricing as Android handsets attack the high, mid and low-end market segments. We do not expect the company's gross margins to rebound."

National Bank Financial lowered its price target for RIM stock to US$25 per share, about CAD$24.53. Prior to the release of RIM's quarterly report on Thursday, the median price for analyst estimates was US$45 per share.

"We'd avoid this stock until there is some evidence that a sustainable turnaround is achievable," Thompson wrote.

On Thursday, RIM announced plans to cut jobs and said it's working toward a late August rollout of its new product line. Its new smartphones will have upgraded operating systems, while BlackBerrys with the same powerful operating system as RIM's PlayBook tablet will be released in early 2012.

In a conference call Thursday evening, company CEO Jim Balsillie blamed lower sales in the United States on BlackBerry's aging product line. Co-CEO Mike Lazaridis also made a rare appearance on the call, trying to assure industry-watchers the company is on track with its new products.

"I truly believe we are approaching the final phase of this transition," he said, adding wireless carriers around the world are taking longer than expected to test and certify the new BlackBerrys. "Why we do the things the way we do may not be obvious from the outside."

With files from The Canadian Press