Research In Motion Ltd. gave an upbeat report on holiday sales yesterday and said that the current quarter would set a company record for device shipments.
RIM co-CEO Jim Balsillie said in a statement that BlackBerry products were selling faster than anticipated and that the company was “positioned to capitalize on the increasing market opportunity in the fiscal fourth quarter 2009 and beyond.”
Several reports after RIM’s announcement characterized the company’s outlook as “rosy.” The current recession is widely expected to last through most of next year, if not longer.
In a conference call after releasing fiscal third quarter 2009 earnings, Balsillie said that supply of the touchscreen BlackBerry Storm would soon catch up with demand. Aggressive marketing in the United States and Europe led to short supplies, he said, and resumption of full stocks of the product would lift results for the current quarter.
According to Balsillie, 60% of RIM’s new customers are consumers, which form 45% of the company’s user base.
The Storm continued to be Verizon Wireless’ top-selling device and it is in high demand among Vodafone Group plc customers in Europe, according to Balsillie. Fully 75% of Storm sales go to new subscribers in the U.S. and an even higher percentage in Europe, Balsillie told analysts.
RIM chasing prepaid
RIM is also targeting the prepaid market with a “BlackBerry in a Box” approach that provides a set amount of service, which afterwards can be topped off by purchasers according to their needs.
The company’s portfolio momentum, a “dramatic expansion” of the company’s addressable market and strong holiday sales will produce a record number of device shipments in the current quarter, the RIM executive said. RIM is targeting 2.9 million new subscribers in the current quarter, up sequentially from the 2.6 million added in the quarter just ended.
RIM said its revenue for the fiscal third quarter 2009 that ended in November was roughly in line with a revised guidance it gave on Dec. 2.
The BlackBerry maker said Thursday that revenue reached $2.78 billion, up nearly 8% on the prior quarter and 66% above the year-ago quarter. Net income reached $396 million, up slightly from the year-ago quarter’s $371 million, but down about 20% from the prior quarter.
RIM shipped 6.7 million devices in the quarter and added about 2.6 million new subscribers.
On Friday the company’s stock rose more than 8% to $41.21 in midday trading, still at the low end of its 52-week range of $35.09 to $148.13.
Despite the positive outlook, analyst Ittai Kidron at Oppenheimer expressed concern for RIM’s gross margins.
“While RIM continues to benefit from smartphone growth, we believe its decision to forego its premium margin profile will weigh on its shares near-term,” Kidron wrote to investors.
“As margin is sacrificed for growth,” Kidron added, “we see increased risk of a miss as RIM’s cost structure begins to mirror a traditional handset OEM’s (original equipment manufacturer). Nokia’s approximately 50% smartphone hardware gross margin opens up an opportunity for aggressive pricing tactics if it delivers the right devices.”
Article updated Dec. 19 to include additional context, comments.
