Research in Motion 3rd-qtr profit grows 7 percent
Thursday December 18, 9:55 pm ET
By Rob Gillies, Associated Press Writer
Research in Motion posts 7 percent gain in 3rd-quarter profit, meeting Wall Street estimates
TORONTO (AP) -- BlackBerry-maker Research in Motion Ltd. reported better-than-expected revenue guidance for the fourth quarter and strong holiday sales of its new smart phones despite the slowing economy.
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The Canada-based company met Wall Street expectations on Thursday by reporting income of $396.3 million, or 69 cents per share, for the three months ended Nov. 29, compared with $370.5 million, or 65 cents per share, in the year-ago period. Sales grew 66.3 percent to $2.78 billion from $1.67 billion.
Excluding one-time charges, RIM said its profit was $477.3 million, or 83 cents per share, the high end of its guidance. Profit is 7 percent higher from the same period last year.
Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, expected income of 82 cents per share on sales $2.8 billion.
RIM said it added 2.6 million BlackBerry subscribers net users during the quarter and shipped 6.7 million devices, as it launched three new smart phones in the quarter, including a touch-screen BlackBerry geared for consumers.
RIM's forecast for revenue in the current fourth quarter is forecast at $3.3 billion to $3.5 billion, with net subscriber additions of 2.9 million and earnings per share of 83 to 91 cents.
"Despite the current turmoil in the economy we believe RIM is well positioned to take advantage of the industry shift to smart phones," Co-CEO Jim Balsillie said on a conference call. He said the volume of shipments were expected to rise to between 7.5 million and 8 million in the fourth quarter.
Analysts said revenue and earnings guidance were better than expected.
"The guidance was the key. ... The revenue guidance is at the high end, almost 20 percent higher of where we were," said Peter Misek, an analyst with Canaccord Adams. "This is a really brutal market and the fact that they can grow revenues like that, wow, I'm impressed."
Misek said he was taken aback by Balsillie's confidence on the conference call that RIM would meet its guidance and that margins will improve next year.
"They've never been that certain or confident before, so that was pretty stunning in this market and this economy as we watch consumer spending numbers continue to blow up," Misek said. "You're going to see substantial growth even in a terrible economy."
Genuity Capital Markets analyst Deepak Chopra said RIM now has lower margins but is selling more BlackBerrys. "The BlackBerry is gaining market share versus other wireless products. The products are moving," Chopra said.
Along with the delayed BlackBerry Bold, the new models include the BlackBerry Storm, the first touch-screen BlackBerry without a keypad, and the Pearl Flip, the company's first flip phone.
RIM cut its third-quarter profit and sales forecasts earlier this month. It said adjusted earnings per share would be between 81 cents and 83 cents for the quarter that ended Nov. 29, down from its earlier forecast of between 89 cents and 97 cents per share. Analysts were expecting a profit of 91 cents per share.
Balsillie said a delay in launching the new phones, and not a slowing economy, was the primary reason for the earnings warning earlier this month.
RIM has been targeting the consumer market after enjoying success in the corporate market for years. Apple Inc.'s iPhone is a major competitor.
