If one didn't see Research In Motion's fiscal second quarter results before the investors call, then it would be easy to believe all of the excessively positive "guidance" offered by RIM's CEOs on Thursday afternoon.
Although executives tried to downplay disappointing sales of both tablets and smartphones during Q2, it's hard to believe they're fooling anyone. Investors and analysts certainly weren't. Just take a look at this initial response from global securities and investment banking group Jefferies:
FQ2 (Aug) results were below consensus and handset shipments were below guidance. FQ3 (Nov) guidance is below St EPS and GM estimates and FY12 guidance was lowered to the low end of the range, but we believe both of these will be difficult to achieve. We see the next two quarters as lame duck quarters ahead of QNX and expect full-year guidance to be lowered again.
Indeed, most analysts on Friday weren't betting on RIM's BlackBerry 7 devices to provide a meaningful boost. Yet, RIM is pinning all of its hopes on BlackBerry 7, which has actually proven its potential in just a matter of weeks.
See also: RIM woes continue: Q2 earnings hit amid weak demand, product shift
Co-CEO Jim Balsillie acknowledged that BlackBerry 7 made its initial launch only during the last three weeks of the second quarter. Balsillie attributed disappointing sales to this fact -- and although it comes off as an excuse at first -- shipments for BlackBerry 7 devices were already near the high end of expectations as the quarter closed.
Describing BlackBerry 7 as a "critical part of the transition plan," Balsillie affirmed that international launches are going well and that we're only beginning to see the results now. The platform and its devices have only just launched in Latin America, and Asia continues to be a stronghold for RIM.
Demand for BlackBerry smartphones was strong across all regions. BlackBerry 7 launches occurred over the past few weeks in most regions around the world, although rollouts in Latin America and parts of Asia will predominantly start this quarter. In North America, BlackBerry 7 smartphones are having an excellent reception, and have driven a meaningful increase in sell-through in the region during the last few weeks of the quarter, and so far in September. In the last week of Q2, BlackBerry 7 smartphones accounted for approximately 35% of our overall sell-through in North America. Outside of North America, sell-through increased almost 50% in the first 2 weeks of Q3, driven by the launch of the new Bold 9900.
With new BB7 smartphones that already are available in North American channels, and with more to come this quarter, we believe we are well positioned to take advantage of the upcoming holiday season. All of our major US carriers -- AT&T, Sprint, T-Mobile, and Verizon, have already or will be launching national marketing and promotional campaigns that will include TV, high profile in-store displays, direct mail, and targeted youth and college programs. Our major retail partners will also have
dedicated merchandising space and targeted promotions over the course of the quarter to drive even greater awareness and sell-through in Q3.
Here are just a few of the stats:
- BlackBerry 7 has already seen 147 launches with 90 carriers in 30 countries.
- It has achieved over 600 certifications with 250 carriers.
- The BB7-powered Curve has already received 1,018 certifications and is expected to be launched by 165 carriers in Q3.
Balsillie pointed specifically towards the 9900 as the cornerstone and success story of the set of seven now-available devices.
"The BlackBerry 9900 is seen as a thing of beauty to behold," answered Balsillie when asked about RIM's confidence in BlackBerry 7, "It’s getting great reviews around the world."
If these launches are going as well as RIM executives are boasting, then BlackBerry 7 really does match the transition (or comeback) that RIM is promising.
As mobile payment platforms grow, co-CEO Mike Lazaridis also pointed towards NFC technology incorporated in BlackBerry 7 devices as a key "differentiator on the enterprise market."
Although RIM reps didn't go into too much detail in regard to this feature during the call, virtual wallets are gaining interest around the world -- especially in emerging markets where RIM is strongest -- so NFC could certainly help boost sales with both the enterprise and consumer crowds.
The upcoming holiday shopping season could also give RIM the boost it is looking for as both CEOs constantly reiterated promotional plans with global partners.
However, RIM's disappointing outlook that dips below Wall Street's expectations for Q3 results do not match with the power of BlackBerry 7 rhetoric. Thus, it's hard to argue with the analysts who don't expect all of the greatness that RIM is predicting for the next few quarters.