RIM reports strong Q3, shares soar. What competition?

RIM reports strong Q3, shares soar. What competition?

Summary: RIM beats Wall Street estimates for Q3 and has a bright Q4 outlook but can it maintain that sort of momentum with the shadow of competition by Apple and Google hovering overhead?


Research in Motion, the maker of the Blackberry, reported better than expected earnings for its third quarter and offered a bright outlook for Q4, despite rumblings about heated competition in the smartphone space, as well as a widespread outage earlier today. Shares were up more than 12 percent in after-hours trading.

For the third quarter, the company reported net income of $628.4 million, or $1.10 per share, beating the $1.04 eps Wall Street had been expecting. It reported revenue of $3.92 billion, up 41 percent from the year-ago quarter. (Statement)

In addition, the company said it added 4.4 million net new Blackberry subscriber accounts during the quarter, bringing its total subscriber base to about 36 million. It shipped 10.1 million devices during the quarter.

Looking ahead, the company said it expects revenue to be in the range of $4.2 billion to $4.4 billion and eps in the range of $1.23 to $1.31. Wall Street is expecting eps of $1.19 on revenue of $4.24 billion. RIM said it also expects to add 4.4 million to 4.7 million new subscriber accounts.

In a statement, co-CEO Jim Baisillie said:

We are pleased to report record shipments of more than 10 million Blackberry smartphones during the third quarter with higher than expected revenue, earnings and subscriber growth. ROM is experiencing a great start to the holiday buying season and the strong Q3 resulots and Q4 outlook clearly reflect the strength of our diversified product portfolio as well as the success of our efforts to expand into broader customer segments and new geographies while maintaining our strong position in North America.

This was a good quarter for RIMM and shares were on the rise - up by more than 12 percent - in after-hours trading. But how long can it sustain this momentum, given the roadmaps for mobile for 2010 are largely focused on Apple's iPhone and Google's Android devices?

During a call with investors, Baisillie spent time talking about growth in international markets, including an announcement of an agreement with China Telecom to offer Blackberry products and services to its customers. He had no details today but more information would come in the months ahead. He called China "an important and strategic market for RIM."

Baisillie, asked about relationships with carriers, noted that there's "a lot of turbulence in the ecosystem right now" and that "you can't force love" with partners. Sure, competitors will be courting long-time carrier partners (note: Google-Verizon), as well as enterprise customers. He said that the overall market is changing - and expanding. Different carriers have different objectives and strategies and want to maintain their relevance. RIM, he said, tries to be a good partner, that "represents an element of consistency" and integration.

He was also asked whether growth was focused on the international markets, including China, or whether North America is still part of the game. Baisillie said there's still opportunity in both and said that the entry-level and SMB markets were areas to watch for RIM.

Earlier today, comScore released a report called "Android: Crashing the Smartphone Party," which suggested that the rapid rise in awareness about Android, as well as the continued momentum behind the iPhone, could shift usage patterns. According to the comScore chart (left), 51 percent of consumers eyeing smartphones next year plan to pick a Blackberry device, while 20 percent will grab an iPhone and 17 percent will go Android. That's pretty impressive seeing how Android is in its infancy and has a market share of less than 4 percent.

Critics are correct to point out that the Blackberry software is stale and needs to step up its game if it plans to compete with the others. Likewise, they are aware that the competition is reaching out to RIM's bread-and-butter: the enterprise market.

Previous coverage: Can RIM keep up with Apple and Android?

Topics: Enterprise Software, Banking, Hardware, Mobility, BlackBerry, Smartphones

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  • See, these are facts...

    ...showing which company is actually dominating the US smartphone market.

    Which just goes to show just how stupid those people asserting that Android and Apple dominate really are.
    Sleeper Service
    • what facts point to their dominance?

      The only figures referenced are their earnings and a poll of what phones people are "expecting to purchase," not phones they have purchased. This survey was done before the verizon droid was even released, which i think most would agree is the first android phone to go mainstream in the US. Expecting to buy and actually buying are two totally different things. Having used blackberries, windows mobile, and android phones, the android phones are way easier to use than blackberries and android has only been on devices for less than 18 months. I agree that blackberries are stagnant not to mention the fact that you have to buy BES licenses to fully integrate with your corporate messaging. I dont understand why any consumer would buy a blackberry when the android and iphones are much easier and more flexible to use.
      • Little things like...

        ...their market share and massive growth rate.

        Did you actually read the article?
        Sleeper Service
      • Understand

        For one - ActiveSync is a poor man's sync, it offers little security and zero management of a mobile deployment. So I guess if yeah your company has no care about mobile device management or security knock yourself out. BES is a platform. If you do not need all the features it provides just open up your OWA portal and use BIS access to pull email.

        If you want the full functionality though yeah there is a CAL cost - JUST like the army of ActiveSync based solutions rushing to meet this need due to EAS being so crippled.

        Two - not everyone uses Exchange. Lotus, Groupwise even a BES for Google now. No one is doing that - again at the level RIM provides.

        Their CAl is actually often a lower TCO compared to any other solution out there. So hmmm if I'm the CIO do I go the poor man route, recognize I need a 3rd party middleware to get proper management, security or stick with RIM that provides it all? People blur the line about what enterprise cares about and consumers. RIM has an easier job as they have a firm undestanding of enterprise and a solid platform that has been improving since 2001.

        Apple / Android / Palm all have consumer focused devices limited to enterprise unless you go a middleware route. Where is your cost / benefit? "Let's budget 200k as that AppStore has some great games to kill teams in meetings!".

        And yes RIM has to address some things in 2010 ASAP. They need a webkit browser, they need a OS refresh (though many feel it's fine as is)., they need a large memory (without MicroSD needed)
      • these facts


        Focus on:
        [i]"RIM sold more than 10 million BlackBerry phones during the third quarter, beating the previous record of 8.3 million, set during the second quarter. By contrast, Apple shipped 7.4 million iPhones in the most recent quarter."[/i]
  • The score may be 10 to 10 to .something

    When this quarter is said and done, when Apple and
    Google announce their results, look for iPhone to at least
    equal or surpass Blackberry sales and Android still looking
    to do a million in a quarter.

    By far, the leading platform is iPhone. Why? It is newer,
    enterprise IT is incredibly slow to adopt anything new (gee,
    what a surprise) and Android just is NOT a compelling
    proposition over RIM and Apple. Google is not yet a
    hardware/software mix that anything but adventurous
    customers are willing to try.

    So if iPhone sells as many phones as Blackberry this
    quarter (don't forget, Blackberry was offering twofers in
    many markets for awhile so some of the unit figures are
    misleading, the margin figures are going to be more
    telling), all of them being sold at full price, the vast
    majority of them going to people who chose them and
    didn't have them chosen for them, it will be clear that
    Apple has the leading technology and user-pleasing
    • *Sigh*

      "By far, the leading platform is iPhone."

      No, it's Symbian and then Blackberry OS.
      Sleeper Service
    • Twofers

      Was it Blackberry offering the Twofers or was, and is it still the carriers offering these deals????
    • iPhone is not Enterprise ready

      Crazy guy on the sideline unverified statements:
      1. The iPhone is a consumer device.
      2. Android is a consumer device.
      3. Palm is a consumer device.
      4. BlackBerry is an enterprise device.

      Yes, there are small carry-over purchases, but the bottom line is that the only company in the four that has a server specifically built so that businesses can control the device is the BlackBerry. The only device in the list that has their own secure network is the BlackBerry.

      Businesses are not buying BlackBerry devices because "they are slow". Keep in mind that enterprise companies have had email-capable BlackBerry devices in the hands of their employees for years before any consumer had that option. There simply is no other enterprise-secure, business-controlled option out there.

      Keep in mind that Steve Jobs himself said the iPhone is not a business device - it is a consumer one. That is evidenced by their choice to fib to consumers that their device was encrypting data locally, fib to Exchange Servers saying it was encrypting it locally, and then release a patch without telling anyone that killed all non-3GS iPhone devices from talking to Exchange Servers. This is not a tiny issue - HIPAA and other state and federal regulations can file lawsuits as a result of this "accident" on the part of Apple. Any business using an iPhone that has security requirements will have litigation issues.

      That said, maybe Google will create a BES-like product that gives enterprise customers the same sort of control that BlackBerry does. Until then, BlackBerry will continue to grow market-share.
      • Agreed

        I agree with everything you wrote.

        Apple just isn't a company for mainstream business. We tried a Mac server and it was years behind what is needed for the enterprise. Sure, some users and departments can make great use of Apple products but for security and management they just aren't enterprise ready. Windows, Unix, Linux, and Blackberries all offer true enterprise management and security so that is why IT departments use them, and are supported by their executives. Companies don't just run out to support the latest toy just because it's cool. Change is expensive and has to be justified. Or is there really something that the iPhone can do for business that BB and the rest can't?
  • RIM needs to beware the "critics"

    RIM need to tidy (a webkit browser should be first) but they have held off from chasing the iPhone and benefited as a result. If they get an urge to chase, just take a look at Palm who believed the critics, dumped their one asset (PalmOS, and its library of apps) and now are in final decline. Hero to zero in just 5 years, who says that stupid people can't run a business, just not very well. In the Spring I move from PalmOS to Symbian.
  • RIM sales/growth proves there are still

    plenty of people who don't want to drink the kool-aid.
    • RE:RIM sales/growth proves there are still

      Shame that Kool-Aid is full of artificial sweeteners and colorings and is of no nutritional value whatsoever. So they haven't lost out any have they?
  • RE: RIM reports strong Q3, shares soar. What competition?

    udiwfu,good post!