WATERLOO, Ontario—Research In Motion Ltd.’s stock rose sharply in trading after the company reported strong quarterly results and offered optimistic guidance. The firm’s stock was up almost 20 percent in trading to about $102.87 per share, a two-year high for the company.
RIM also announced it will begin an internal review of its stock-option granting practices. Many companies have initiated similar reviews of stock-option practices.
RIM reported revenues of $658.5 million for the quarter that ended Sept. 2, up 34.4 percent from revenues of $490.1 million during the same quarter last year and beating average analyst estimates of $648.39 million.
The company said handheld revenues made up the bulk of its revenues at 72 percent, followed by service, software and other revenues. RIM said about 705,000 customers activated Blackberry subscriber accounts during the quarter, bringing the firm’s total BlackBerry customer base to 6.2 million.
The company reported preliminary net income of $140.8 million, or 74 cents per share.
RIM too offered guidance for the current quarter, including revenues of between $780 million and $820 million and EPS of 88 cents to 95 cents. Analysts had expected revenues of $699 million and EPS of 78 cents.
The numbers come at an opportune time for RIM, which is facing stiff competition from the likes of Nokia Corp. and Motorola Inc. However, investors seemed satisfied with RIM’s position against such handset giants.
“With RIM entering a much larger prosumer market, we believe net subscriber additions could accelerate faster than we anticipate,” wrote Maynard Um, an analyst with UBS, who raised his price target for the company from $110 to $125. The firm makes a market in RIM securities.
RIM recently released its Pearl device, which is focused on the larger mass market and breaks RIM out of the smaller, enterprise device business.
RIM however cautioned that its results are preliminary pending its stock-option review. The company said an audit committee made a preliminary determination that the company did make stock-option accounting errors starting in 1998, and that RIM may have to restate its earnings. The firm said the restatements could reduce its earnings by about $25 million to $45 million between 1997 and today.
