RIM's 18% revenue leap still disappoints analysts
Co-CEO dismisses fears of increased Android competition and lower prices
Published: 6 April, 2010
READ MORE: Financial | Research In Motion | Handset
Expectations surrounding RIM are currently so high that even a 18% year-on-year leap in revenues disappointed Wall Street. The Canadian firm shipped 10.5m units in its fourth fiscal quarter, but analysts had hoped for 11m.
RIM reported net income up 13% on last year, to $710.1m, on revenue of $4.08bn, an 18% jump from the 2009 period and 4% up on the previous quarter. Analysts had expected revenue of around $4.3bn. RIM shipped about 37m devices during its full fiscal year. The company added around 4.9m net new BlackBerry subscriber accounts in the quarter, giving it a total BlackBerry subscriber account base of over 41m.
On the bright side, the firm's guidance for its current fiscal first quarter of 2011 was better than expected, with revenue forecasts of $4.25bn to $4.45bn. The company said it expects to ship between 11.2m and 11.8m units in the quarter with net subscriber additions of between 4.9m and 5.2m.
However, analysts still question whether the company can sustain its recent gains in units and market share, as competition mounts in the smartphone sector, and as the focus shifts towards the mass market, where the economies of scale of Nokia and Samsung carry more weight. Both the top two handset makers have pledged a stronger smartphone assault this year, especially in RIM's north American heartland.
Research firm Canalys believes RIM will hold onto its smartphone market lead in north America this year, but that its share will fall from 49% to 43%, mainly under pressure from Android devices.
RIM's co-CEO Jim Balsillie waved off such concerns. "North America is doing very, very well," he said on the results conference call, according to Bloomberg. "Don't misconstrue something that shouldn't be misconstrued."
The other major fear about RIM is the impact of tougher competition on its margins, given that it will need to compete in lower priced segments and spend more on marketing. Guidance on average selling prices was weaker than expected, with RIM predicting that ASP would drop to between $305 and $310 in the current quarter, compared to $311 in Q4 - which was already below expectations.
For the full fiscal year ended February 27, revenue was up 35% to $14.95bn and net income was up 29.8% to $2.46bn.
Balsillie said in his statement: "We are off to a great start in fiscal 2011 and expect strong shipments, revenue, subscriber and earnings growth in Q1." He added: "If you saw the roadmap, you would be blown away."
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