RIM trounces expectations and shares rise
RIM has plenty going for it. It has millions of loyal subscribers and sales of "smart" phones are expected to climb this year, in sharp contrast to the outlook for the overall wireless industry. But the company faces some headwinds as well. Increased competition, a lagging stock price (although it has gained momentum in recent days) and concerns that its expansion into the consumer market could take a bite out of profits down the road.
How well Research In Motion can hold up during the economic slump was definitely on the minds of investors and analysts alike, but the company eased concerns as it boosted its outlook, sending shares soaring in after-hours trading. The company expects profit for the current quarter to fall between 88 to 97 cents a share versus estimates of 82 cents.
"We are very pleased to report another record quarter with standout subscriber growth that speaks volumes about the early success and momentum of our new BlackBerry products," said Jim Balsillie, Co-CEO at RIM. "RIM experienced an extraordinary year in fiscal 2009, shipping our 50 millionth BlackBerry smartphone and generating $11 billion in revenue. Looking ahead into fiscal 2010, we see exceptional opportunities for RIM and its partners to leverage the investments and success of the past year to continue growing market share and profitability."
During the last quarter, consumers flocked to the BlackBerry. Research In Motion says it added about 3.9 million new subscribers, bringing the total to 25 million. And many current subscribers just can't seem to get enough of the device. Take President Barack Obama for instance. Our tech savvy commander-in-chief couldn't bear the thought of parting with his beloved gadget and got special permission to continue using it after taking office to chat with chief White House staff and close family and friends. Such nonrestricted e-mail communication in the past was prohibited from use by the president because of security concerns.
But the "CrackBerry," as it's been dubbed, might be losing some of its high. Users shared mixed views during a Facebook discussion on the topic. Dasha Ross, Senior Manager, Public Relations for Marriott International exclaimed, "Love my crackberry! I have the Bold. Just got it and it's great! photos, video, music, Internet, e-mail, oh yeah and it rings too. lol." But former BlackBerry subscriber Damon Lipscomb, a Web Production Specialist at Johns Hopkins School of Medicine wrote, "The BlackBerry is overrated. I accomplish much more with my MotoQ9c. It works better with organizations that use Exchange as their mail client and I can use custom apps like the Opera Browser, Google maps, Pandora and a Twitter app for free." And then of course, there's Apple's (AAPL) iPhone, which continues to give RIM a run for its money.
Amid increased competition, RIM is expanding its reach beyond the business niche, honing in on the consumer market. On Wednesday, the company took a page out of Apple's playbook, rolling out a one-stop shop for applications. Out of the 1,000 add-ons available, the top downloads by BlackBerry users (as of mid-day Wednesday) were news browser Viigo, music service Shazam and a Facebook program. The company is also offering generous revenue-sharing deals with software developers and cell phone carriers as part of the plan.
"BlackBerry App World aggregates a wide variety of personal and business apps in a way that makes it very easy for consumers to discover and download the apps that suit them while preserving the appropriate IT architecture and controls required by our enterprise customers," RIM President Mike Lazaridis said in a release.
Also coming soon to BlackBerry screens: full-length downloads of television shows from networks including NBC, CBS and MTV. And rumor has it that the company will release a new BlackBerry that will be available exclusively available on Verizon in the near future.
Here's the buzz on Research In Motion around the Web:
"They are crushing it," Canaccord Adams analyst Peter Misek said. "Not only are they holding up, but it's clear they're gaining market share."
"RIM is gaining market share in a market that still appears to be growing despite the economic environment," said Scotia Capital analyst Gus Papageorgiou. "Although margin deterioration has been an issue we believe that trend will stabilize. We believe street expectations are too pessimistic."
App Store Review: "The download process is simple and straightforward, but we still hate the fact that RIM wasn't able to implement a backend payment structure of their own."
"RIM has a lot of pressure from a competitive standpoint; its margins are being squeezed as they launch lower-end handsets to capture greater market share," he said, adding that an app store is a way to capture more revenue."
TV Service Analysis: "No one will use the service for the same reason that very few people watch feature-length films on Apple iPods. The screens are too small and glare ruins the picture. No one should count on the product to help RIM sales."
(24/7 Wall St.)