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BlackBerry Maker Allays Handset Fears As Its Q4 Results, Outlook Exceed Views

April 03, 2008


CNN Money.com


BlackBerry-maker Research-In-Motion (RIMM) RIMM served notice that it is overcoming fears of a slowdown in cell phone sales and the competitive threat of Apple's (AAPL) iPhone.

The smartphone maker late Wednesday said quarterly profit and sales more than doubled year-ago figures, handily beating analyst expectations on record new-subscriber sign-ups. Its outlook for the current quarter also beat views.

RIM shares rose 5% in late trading, after the company released results.

"We continue to be impressed with RIM's ability to roll out successive iterations of phones that continue to build on prior successful launches," Jim Suva, a Citi (C) Investment Research analyst, wrote in a note to clients.

The Canadian company said sales for its fiscal fourth quarter ended March 1 jumped 102% from the year-earlier tally to $1.88 billion. Analysts polled by Thomson Financial expected $1.85 billion.

RIM said per-share profit soared 118% to 72 cents, 2 cents above analyst views.

For the quarter ending May 31, the company expects sales of $2.23 billion to $2.3 billion vs. views for $2.02 billion. RIM sees per-share profit of 82-86 cents; analysts expected 76 cents.

The earnings report comes when much of the industry is gathered at a large cellular telecommunications trade show in Las Vegas. RIM announced several new phones at the show that will be offered by carriers Verizon Wireless (VZ)and T-Mobile USA. It also unveiled new enhancements, such as live TV on BlackBerry products, connectivity to XM Satellite Radio (XMSR) and a variety of financial services offerings.

Suva and other analysts expect RIM soon will come out with touch screens, a key selling point 15f the iPhone.

"Our conversations with company representatives lead us to believe that touch screens are certainly part of the RIM road map, but as is customary with RIM it will not be released until the company believes it can exceed the current state of the art," Suva wrote.

RIM added 2.18 million subscribers in the quarter, its first 2 million-plus quarter. Analysts generally had expected 1.98 million to 2.1million, a figure that had been rising late in the quarter. BlackBerry now has some 14 million subscribers, up from 8 million a year ago. RIM said it expects another 2.2 million subscribers this quarter.

Concerns about the cell phone market surfaced last month when Sony (SNE) Ericsson (ERICY), the No. 4 cell phone maker, warned of slowing handset sales growth.

RIM co-CEO Jim Balsillie, in a conference call with analysts to discuss results, credited "a strong showing from our carrier partners, new direct distribution channels and numerous promotions in January and February."

RIM said it shipped 4.4 million smartphones in the fourth quarter and 14 million for its fiscal 2008 year. For the year, it posted revenue of $6.01 billion, up 98%, and earnings of $2.26, up 105%.

A recent report from ChangeWave Research said BlackBerry is the smartphone brand consumers prefer most, a big plus for a product that has found most of its strength so far to be among business users. The No. 2 preferred smartphone, said ChangeWave, is the iPhone. Smartphones are high-end handsets, with features that include e-mail and Internet access.

Bill Whyman of International Strategy & Investment, in a research report last month, said smartphones "are among the best growth opportunities in consumer technology." He said smartphones represent 12% of total cell phone units shipped, but said the category is growing much faster than typical cell phones.

Originally published in the April 3, 2008 version of Investor's Business Daily.

CNN Money.com