RIM Surges After Forecasting Sales Above Analysts' Estimates
Sept. 17 (Bloomberg) -- Research In Motion Ltd., maker of the BlackBerry smartphone, surged in late trading after forecasting revenue and profit that were higher than analysts' estimates, buoyed by expectations for its new Torch phone.
The Torch "is an excellent step forward," Co-Chief Executive Officer Jim Balsillie told analysts yesterday on a conference call. "The promo campaigns are just starting. That's why you have seen the jump in guidance."
Revenue this quarter will be as much as $5.55 billion and earnings per share will be as much as $1.70, RIM said in a statement yesterday. Analysts had projected revenue of $4.82 billion and profit of $1.39 a share.
RIM is battling Apple Inc.'s iPhone and a slew of handsets based on Google Inc.'s Android software from Motorola Inc. and HTC Corp. RIM said it shipped 12.1 million devices last quarter, 45 percent more than a year earlier, and expects to add up to 5.4 million net new subscribers and ship 13.8 million to 14.4 million phones this quarter.
"Their subscriber growth and revenue growth is very impressive year over year," said Michael Yoshikami, chief investment strategist with YCMNet Advisors in Walnut Creek, California, who doesn't own the company's shares. "It suggests to me that RIM is not done by far and that they still have corporate America to use as a launching pad, even if iPhone and Android are starting to attack their market share."
RIM, based in Waterloo, Ontario, rose as much as $4.32, or 9.3 percent, to $50.81 in extended trading after the announcement, after closing at $46.49 on the Nasdaq Stock Market yesterday. The stock has lost 31 percent this year.
Sales last quarter rose 31 percent to $4.62 billion, RIM said. Analysts had predicted $4.49 billion, the average of estimates compiled by Bloomberg. Earnings per share were $1.46 compared with an average estimate, excluding some costs, of $1.36.
Market Share
RIM's global share of the smartphone market slid to 18.2 percent in the second quarter from 19 percent a year earlier as Apple's share rose to 14.2 percent from 13 percent, while Android surged to 17.2 percent from 1.8 percent, according to researcher IDC.
RIM added 4.5 million net new subscribers last quarter, missing analysts' projection for 5 million.
Investors may have been overly focused on the high end of the smartphone market, where RIM has lost share to rivals, and not focused on international growth, said Tero Kuittinen, an analyst at MKM Partners in Greenwich, Connecticut.
High-End Products
"Not everyone lives on Madison Avenue," said Kuittinen, who has a "buy" rating on the stock. "In New York and San Francisco, RIM isn't moving as much high-end product. But 80 percent of the world is prepaid, and this summer RIM had a lot of success with cheaper products like the Pearl and the new Curve" in markets such as Brazil and Indonesia, he said.
Balsillie told analysts that "excellent performance" in Latin America and Asia were "strong" drivers of growth last quarter.
The BlackBerry Torch, a touch-screen model that went on sale in the U.S. with AT&T Inc. last month, has received mixed reviews and generated lukewarm sales, analysts said before the results. Balsillie rejected that notion in his remarks to analysts.
"Based on sell-through after the first three weeks of launching with AT&T, Torch is the most successful launch in RIM's history," he said. He declined to give actual sales figures.
'Strategic Extensions'
Balsillie hinted that the company may introduce new products or innovations at the upcoming BlackBerry Devcon conference in San Francisco, which starts Sept. 27. Attendees will see "strategic extensions" and new "aspects of design philosophy" at the event, he said.
Short sellers had bet RIM would continue to struggle against Apple and Google. Short interest in RIM had climbed to 31.1 million shares as of Aug. 31, more than double the level on April 15, according to data compiled by Bloomberg.
Net income climbed to $796.7 million from $475.6 million, or 83 cents a share, a year earlier. Gross margin, the percentage of sales left after production costs, is expected to be about 42 percent this quarter, down from 44.5 percent last quarter, the company said. The average selling price will climb from $304 last quarter to between $310 and $315 this quarter, the company said.
To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net
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