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RIM delivers solid Q4 on BlackBerry sales; shares soar

updated: Research in Motion reported strong fourth-quarter earnings that beat Wall Street's expectations and sent shares soaring in after hours trading. For the quarter ending Feb.
Written by Sam Diaz, Inactive on

updated: Research in Motion reported strong fourth-quarter earnings that beat Wall Street's expectations and sent shares soaring in after hours trading. For the quarter ending Feb. 28, the company reported net income of $518.3 million, or 90 cents per share, on $3.46 billion in revenue. Analysts polled by Thomson Reuters had been expecting earnings of 84 cents a share on revenue of $3.4 billion. (Statement)

RIM projected earnings per share of 88 cents to 97 cents in the first quarter, a projection that provides ample upside to estimates of 82 cents a share. Revenue for the first quarter was projected to be $3.3 billion to $3.5 billion compared to estimates of $3.5 billion.

Translation: RIM is saying that it can deliver better profits on so-so revenue because its margins will be 43 percent to 44 percent, well above the 40 percent modeled by Wall Street.

For the fiscal year, the company reported net income of $1.89 billion, or $3.30 per share, on $11.07 billion in revenue.

The company said it added about 3.9 million net new BlackBerry subscriber accounts, bringing the total to about 25 million. Among the contributing factors was the buy-one-get-one-free promotion through Verizon Wireless. In addition, the company ramped-up inventory on the long-awaited Storm, a touch-screen Blackberry to rival Apple's iPhone.

The company said last month that it had record net subscriber additions through December and after the holidays but that the surge will become “more normalized” in the first quarter. On a conference call with analysts, co-CEO Jim Balsillie said that about 70 percent of the devices activated in the quarter were for non-enterprise customers. Today, the ratio of enterprise to non-enterprise customers is about 50-50.

In particular, the Storm "has clearly opened up a new market segment" and "drove record levels" of new subscribers. The Storm's reach is being expanded, now available in other countries, specifically Canada and emerging markets in Brazil, Hong Kong and India. In addition, the company noted the overall strong growth in Latin America, specifically Venezuela, Chile and Brazil.

Looking forward, the company highlighted the launch of its App store this week - a move that follows Apple's success with applications for the iPhone and iPod Touch - and noted that the store will see additional applications in it over time.

The company projects first quarter revenue to be in the range of $3.3 billion to $3.5 billion, EPS of 88-89 cents per share and a gross margin of 43-44 percent. It expects net subscriber additions to be between 3.7 million and 3.9 million and units shipped to be between 7.5 million and 8 million.

In a statement, Balsillie said:

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. 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.

Shares were up more than 7 percent in regular trading, closing at $49.09, but soared in after hours trading, jumping more than 22 percent.

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