BlackBerry leads smartphone pack, but RIM outlook disappoints
Filed under: Adobe Systems (ADBE), Aetna Inc (AET), Company News, Technology, Earnings
Another great quarter from Research In Motion (RIMM). After the closing bell today, the Waterloo, Ontario–based BlackBerry marketer reported $643 million in earnings ($1.12 per share) for the first quarter of fiscal 2010, ending May 30, compared with $482.5 million (84 cents per share) a year earlier. Excluding a $175.1 million tax benefit and other one-time items, RIM earned $564.4 million (98 cents per share). The company also announced revenue of $3.42 billion, up 53 percent from the same quarter last year.The numbers, while impressive, are mostly in line with expectations. About 81 percent of revenue came from sales of devices; 13 percent came from service, 2 percent from software, and 4 percent from other businesses. Gross margins were strong at 43.6 percent -- better than the 40 percent margins in its fourth quarter.
RIM also said it shipped 7.8 million BlackBerrys and added another 3.8 million BlackBerry subscribers, slightly below expectations, to bring its total subscribers to nearly 29 million and giving it a 55 percent share of the smartphone market in the U.S., according to IDC estimates.
"The industry leading BlackBerry product portfolio is driving strong customer demand around the world, and our penetration of new market segments continues to expand," said Jim Balsillie, RIM's co-CEO. "We are particularly excited about the strength of our product portfolio for fiscal 2010, and we are looking forward to driving continued growth and profitability in our business throughout the remainder of the year."
That all seemed like good news. Yet shares of RIMM, up about 90 percent year-to-date, fell more than 5 percent in after-hours trading. Why? Inflated expectations. Looking forward, the company's second-quarter forecast was also in line with Wall Street expectations, and investors clearly want the company to beat expectations. RIM said it expects to generate earnings of 94 cents to $1.03 per share on revenue of $3.45 billion to $3.7 billion in sales.
But investors do have other reasons for worry. RIM has long dominated the smartphone market, but pressure is increasing from the Apple (AAPL), which launches its new iPhone 3G S on Friday, and the Palm (PALM) Pre, which went on sale this month. Plus, Google's (GOOG) Android phone and Samsung (SSNLF), as well as smart phones from Nokia (NOK), are all vying for a piece of the pie.
To keep the stock rising, RIM will need to fight off competition; the BlackBerry Tour 9630 is one new weapon in its arsenal, but the company will have to introduce other products this year. RIM says it will sell between 8.1 million and 8.7 million BlackBerrys in its second quarter.
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Reader Comments (Page 1 of 1)
6-18-2009 @ 10:44PM
Rich said...
No wonder they made large profits i purchased a bb bold and was to receive a 100.00 rebate after twice submitting receipts and the two follow up calls they still never sent my rebate crooks my next is iphone and im informing everyone very poor business
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6-19-2009 @ 7:54AM
iphonerulez said...
Compared to other handset makers, RIM is still doing very well, so I don't know what kind of expectations investors want. They shouldn't be treating a good company with disdain. It's all about relative numbers in a down economy which I'm sure which caused the "softened" numbers in the way of sales. There are certain factors that a company can't control. You can put out the best products in the world and if nobody is willing to buy them, then you get poor sales. But that is not the fault of the company. People have cut back buying from all companies.
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6-19-2009 @ 8:57AM
Joe said...
Maybe their other products are good, but I have a Storm and it is junk. It turns off ability to receive phone calls without notice. It stops collecting emails without notice. The ringer changes to vibrate on its own so you don't hear the phone. It freezes up all the time and needs to be rebooted. Covered by warranty (on phone number 4), but I prefer one that just works. I miss my Motorola razor.
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