RIM's results holding firm for now
Beats revenue and profit forecasts though fears about subscriber additions
Published: 20 September, 2010
READ MORE: Financial | Research In Motion
Research In Motion has spent years living with prophecies of doom, while consistently turning in decent results. Once again, even while the seeds of its future decline are clear to see, it has exceeded forecasts with its second quarter figures, and revealed that the BlackBerry Torch - which debuted to mixed reviews - is its bestselling model ever.
Shares in RIM leapt by 10% after the financial report, especially as the third quarter forecast also beat Wall Street expectations. Revenue for the three months ended August 28 grew 31% year-on-year to US$4.62bn, whereas analysts had anticipated $4.49bn. Net income surged by 68% to $796.7m and earnings per share were up 76% to $1.46, compared with an average forecast, excluding some costs, of $1.36.
Smartphone shipments were up 45% to 12.1m units, suggesting that RIM's much anticipated drop down the ranks in the high end handset space might not come as quickly as some think. The BlackBerry subscriber base grew by about 56% year-on-year and Q2 revenues were split 79% to devices, 17% to services and the rest to other/software. About 52% came from outside north America.
The vendor forecast third quarter revenue between US$5.3bn and $5.55bn, up on previous analyst estimates of $4.82bn, while EPS is expected to be between $1.62 and $1.70. This growth will largely be achieved by broader distribution of the Torch, which will be shipped in various international markets during this quarter. Co-CEO Jim Balsillie said this firm was already "the most successful GSM BlackBerry smartphone launch in RIM's history", and after an initial roll-out with AT&T, it will reach 75 additional carriers in Mexico, Canada and Europe soon.
Darker spots were net subscriber additions, which at 4.5m were lower than RIM had previously forecast, and Balsillie pointed to the elements that analysts expect to pressurize the firm increasingly from 2011, saying the firm had seen lower than expected net adds in its US heartland "due to a large number of competitive offerings hitting the market in the absence of new BlackBerry product offerings. And in the latter part of the quarter we saw some impact from the weakness in the Middle East markets due to the well publicized issue surrounding BlackBerry service in the region."
He said he was confident RIM could reach a compromise with governments, like India's, which are demanding the ability to monitor BlackBerry emails for security reasons, and to host the service in their own countries. But such deals could make the famous corporate email platform less differentiated from rivals like Microsoft and Google.
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