Wireless enterprise company Research In Motion Ltd. announced it turned the corner and posted a profit for its second quarter-a major move for the company but one still overshadowed by its legal wrangling with NTP Inc.
Indeed, the legal issues are such that Nokia Corp. is delaying the introduction of its BlackBerry-capable 6800 messaging device. Nokia is selling the device in the United States, but is not selling the associated BlackBerry software as previously planned. The software would allow 6800 users to connect to RIM’s BlackBerry enterprise server. Nokia said it is delaying the release of the software pending a review of the RIM-NTP litigation.
RIM lost a jury decision to NTP regarding its technology patents. The company is appealing the verdict. RIM recorded a $5.7 million patent litigation provision in its second quarter due to the ruling.
On the brighter side, RIM posted a massive increase in revenues and a net income of $2.1 million. The company posted a net loss of $8.2 million in the prior quarter. The news sent RIM’s stock up about 4 percent to $37.13 per share.
“The Q2/04 results reflect an inflection point for RIM and the fundamental prospects of the BlackBerry technology,” wrote BMO Nesbitt Burns in a research note. “The company achieved operational profitability and a coalition of positive fundamentals necessitates a dramatic re-evaluation of the financial model. We are raising our FY04 estimates to $534 million in revenues.”
RIM’s revenues for the second quarter clocked in at $125.7 million, up 20 percent from the previous quarter. The total number of BlackBerry subscribers increased by 96,000 from the prior quarter to 711,000 subscribers.
“RIM’s technology and business plans remained on track during the second quarter as the global popularity of BlackBerry continued to grow,” said Jim Balsillie, RIM’s chairman and co-chief executive officer. “Our outlook for further growth in the second half of the fiscal year is supported by ongoing product leadership, channel strength and sales momentum.”
