RIM earnings: Focused on growing global business

RIM's profit was up but sales disappointed Wall Street, sending shares down after the company announced first quarter earnings.

Research in Motion today reported first quarter earnings that beat Wall Street estimates but missed the analysts' targets on revenue. The company also announced a share repurchase plan. (Statement)

For the quarter, the company reported revenue of $4.24 billion, up 24 percent from the year-ago quarter.  Net income came in at $768.9 million, or $1.38 per share, up from the $1.12 per share reported in the year ago quarter. Analysts had been expecting earnings of $1.34 a share on revenue of $4.36 billion.

Looking ahead, the company projected second quarter revenue between $4.4 billion and $4.6 billion, in-line with Wall Street's estimates of $4.5 billion for the quarter. Second quarter earnings are expected to be between $1.33-$1.40 per share. Gross margin for Q2 is expected to be approximately 44% and net subscriber account additions are expected to be between 4.9-5.2 million.

The company added 4.9 million net new BlackBerry subscriber accounts during the first quarter, bringing its total BlackBerry subscriber account base to about 46 million. About 79 percent of the company's revenue comes from device sales.

In a statement, company co-CEO Jim Balsillie said:

RIM achieved significant earnings growth and shipped a record 11.2 million devices during the first quarter, including its 100 millionth BlackBerry smartphone. We continue to be focused on growing our business globally and we believe that the range of exciting new BlackBerry products being released in the coming months will create significant opportunities to accelerate RIM's growth in the second half of the fiscal year.

Ironically, the company reported its earnings on the same day that consumers spent the night in line at Apple stores to get their hands on the new Apple iPhone 4. Apple, like Google, has captured widespread interest - and adoption - of their new smartphones. More importantly, both have stepped up their offerings for business customers, the one segment where the Blackberry still dominates - for now.

Larry Dignan's preview today suggested that the competitive heat in North America could force RIM to focus on the growth of the business globally and that seems to be where the company is headed. Right out of the gate on a conference call with analysts, Balsillie said the business outside of North America was "particularly strong."

He also said that the forecast for the second quarter was especially challenging because of the timing of the release of new devices and the new BlackBerry OS 6.0. He said that the introductions could bridge the close of the second quarter and opening of the third quarter and it's unclear what sort of impact that might have on second quarter numbers.

He also suggested that the new tiered data pricing plan by AT&T could be a positive for BlackBerry sales because the caps on data usage could prompt consumers to embrace devices that are "more efficient" with data usage than others. He said BlackBerry customers could do just fine with the lower-tiered plan while owners of devices that run on other platforms could find themselves needing the higher-tier plan.

The company also said it plans to repurchase up to 31 million shares over the next 12 months. It said it can repurchase about 10 million of the 31 million over the Nasdaq but that any additional purchases over the Nasdaq or Toronto Stock Exchange would be subject to regulatory approval. In the past 12 months, the company has repurchased about 18.2 million shares.

Shares of RIM were down less than two percent in regular trading today, closing at $58.58. Shares continued to dip in after-hours trading.

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