RIM shares surge as BlackBerry sales hit record 7.8 million

[AppleInsider]

Shares of Research In Motion stock rose almost 23 percent after the company reported strong quarterly and year-end results for its BlackBerry smartphones, climbing back from a precipitous fall in February that drove the company to issue an outlook warning.

RIM announced $3.46 billion in revenue for the fourth quarter of fiscal 2009, which ended February 28. That's a 24.5 percent increase from the previous quarter of $2.78 billion, and up 84 percent year-over-year. The company also said it signed up 3.9 million net subscribers who are new to the BlackBerry platform during the quarter.

The results were slightly better than Wall Street's estimates, which had dropped significantly with the February warning. Much like Apple, RIM is doing well enough in comparison with its peers that even meeting expectations is cause for celebration in the current economic conditions.

"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 co-chief executive Jim Balsillie. "RIM experienced an extraordinary year in fiscal 2009, shipping our 50 millionth BlackBerry smartphone and generating $11 billion in revenue."

Revenue for RIM's entire fiscal year was $11.07 billion, up 84 percent from $6.01 billion in fiscal 2008. The Canadian company reported $518.3 million in net income for the quarter ($0.90 per diluted share) compared with $396.3 million ($0.69) for the previous quarter. A year ago the BlackBerry manufacturer reported $412.5 million, or $0.72 per share, in the same quarter.

Quarterly gross margin was 40%. The company is estimating revenue for the first quarter of fiscal 2010, ending May 30, 2009, in the range of $3.3 to $3.5 billion while adding 3.7 to 3.9 million new subscriber accounts. RIM says the fourth quarter's revenue breaks down to 83 percent for devices, 12 percent for service, two percent for software and three percent for other revenue.

Apple iPhone vs. BlackBerry

Despite the economy and competitors such as Apple's iPhone, RIM shipped a record 7.8 million devices, besting its previous high of 6.7 million in the third quarter.

Not taken by Storm

RIM does not break out sales figures for its individual devices, such as the BlackBerry Storm, its touchscreen competitor to the iPhone. However, company leaders claimed the Storm was driving "record levels" of new subscribers according to a MarketWatch report.

Verizon Wireless, the exclusive source for the Storm, heavily promoted the new model in advertising that clearly alluded to the success of the iPhone. Many loyal BlackBerry users have been less than pleased with the new model however, which sacrifices the messaging savvy that the BlackBerry brand is known for to simply offer an alternative product that looks more like an iPhone. Popular Mechanics even called it the "anti-BlackBerry" for lacking the keyboard, simplicity and speed users expected of a RIM product.

The Storm was also ravaged by reviewers over a series of hardware problems, a sluggish user interface, and its lack of Wi-Fi wireless networking, an omission pushed by Verizon to keep subscribers tied to the company for all their network access. The Wall Street Journal described it as a "bumpy start," with estimated quarterly launch sales of just half a million, a fifth of the iPhone 3G units AT&T sold, and well below a tenth of the 6.8 million units Apple sold worldwide in its launch quarter.

RIM has taken steps to weather the unpleasant launch of the Storm in a tough economic climate; Balsillie gave credit for the company's gains to its recent focus on lowering operating expenses and increasing efficiency in order to keep build costs low. He said that carrier inventory "is at the lowest levels we have seen for some time" due to the slowing economy, adding that mobile phone service operators have been slow to replenish inventory.

[ View this article at AppleInsider.com ]

[hittrj01]

As much as I am not a fan of RIM's offerings, I see the merit and value in them. I prefer the iPhone, but for people who don't, there is not a better alternative out there than a Blackberry. While Apple and RIM are direct competitors to each other, I believe their products cater to two completely different crowds. Sure, the Blackberry has multimedia functions and the iPhone has email, but that isn't the focus of each respective platform. To each his own, but good for RIM. Competition is never a bad thing.

Also, first post! This will never happen again!

[TenoBell]

good for RIM

[NasserAE]

Excellent. Business is not as bad as everybody thought.

[melgross]

I have to give credit to RIM. Like Jobs had said, RIM is a good company, and a worthy competitor.

We should remember that they too have been major innovators.

I'm happy so see, so far, some positive comments here about this.

[anantksundaram]

deleted post

[anantksundaram]

I am certainly hapy for RIMM shareholders that the stock rose 23%. But it is interesting to me that 4Q08-4Q09 revenue rose by 84%, but net income only rose (518.3/412.5)-1 = 25.6%.

This implies to me that one can't rule out either a pricing problem or extra pressure on margins from the newer products in the pipeline, or competition (read: iPhone).

The stock price bounce could also just be a correction to adjust for an unfair prior drop.....

[melgross]

Originally Posted by anantksundaram

I am certainly hapy for RIMM shareholders that the stock rose 23%. But it is interesting to me that 4Q08-4Q09 revenue rose by 84%, but net income only rose (518.3/412.5)-1 = 25.6%.

This implies to me that one can't rule out either a pricing problem or extra pressure on margins from the newer products in the pipeline, or competition (read: iPhone).

The stock price bounce could also just be a correction to adjust for an unfair prior drop.....

Apple has that problem when it releases new products. High initial expenses in production, higher than normal marketing costs, higher than normal returns on items, etc.

If Apple can manage a 4 million sales number this quarter, as it looks possible, then that would be good as well.

[teckstud]

RIM is sponsoring U2.
RIM should continue to do very well as long as they are affiliated with all the carriers and not just stuck with ONE CRAPPY ONE.
It's called penetration.

[TenoBell]

Even though some think that one has to die for the other to succeed. I think both Apple and RIM complement each other as the smartphone market grows. The market can grow for everyone.

Originally Posted by melgross

I'm happy so see, so far, some positive comments here about this.

[solipsism]

Originally Posted by TenoBell

Even though some think that one has to die for the other to succeed. I think both Apple and RIM complement each other as the smartphone market grows. The market can grow for everyone.

I expect RiM's sales to grow but their stock price has rebounded much slower than the other tech stocks I follow. While they have a great product in their handhelds and server-side devices I think they will have no choice but to lower the price on their server-side HW and client licensing fees as other Exchange capable smartphones get similar capabilities as BBs. This will further hurt RiM's bottom line despite increased sales as their handheld revenue accounts for only a small fraction of their gross profit. I hope RiM (and Palm for that matter) have a long term plan that will work, but I am glad that I sold my remaining RiM shares last year at $135.

[anantksundaram]

Originally Posted by melgross

Apple has that problem when it releases new products. High initial expenses in production, higher than normal marketing costs, higher than normal returns on items, etc.

If Apple can manage a 4 million sales number this quarter, as it looks possible, then that would be good as well.

Oh, I don't disagree. The fact that profit does not rise in proportion to sales with a new product is fairly obvious. It seems to me, however, that 84% v. 26% is rather low profit leverage on the incremental sales. I conjecture that they've had to do some aggressive price discounts to gain share (Apple may have a cost issue with new product intros, but almost never a pricing problem coming right out of the gate).

[teckstud]

Originally Posted by TenoBell

Even though some think that one has to die for the other to succeed. I think both Apple and RIM complement each other as the smartphone market grows. The market can grow for everyone.

Not as long as you're stuck with one carrier. You will eventually stagnate.

[teckstud]

Originally Posted by solipsism

I expect RiM's sales to grow but their stock price has rebounded much slower than the other tech stocks I follow. While they have a great product in their handhelds and server-side devices I think they will have no choice but to lower the price on their server-side HW and client licensing fees as other Exchange capable smartphones get similar capabilities as BBs. This will further hurt RiM's bottom line despite increased sales as their handheld revenue accounts for only a small fraction of their gross profit. I hope RiM (and Palm for that matter) have a long term plan that will work, but I am glad that I sold my remaining RiM shares last year at $135.

Well there were some positive posts on here.

[cameronj]

Originally Posted by solipsism

I expect RiM's sales to grow but their stock price has rebounded much slower than the other tech stocks I follow. While they have a great product in their handhelds and server-side devices I think they will have no choice but to lower the price on their server-side HW and client licensing fees as other Exchange capable smartphones get similar capabilities as BBs. This will further hurt RiM's bottom line despite increased sales as their handheld revenue accounts for only a small fraction of their gross profit. I hope RiM (and Palm for that matter) have a long term plan that will work, but I am glad that I sold my remaining RiM shares last year at $135.

Clearly a good sale. More importantly, did you buy something that dropped less than 50% in the meantime? Because if you bought a tech company, you probably would have done better to hold RIMM. I'm just glad I bought RIMM at $35

[solipsism]

Originally Posted by teckstud

Not as long as you're stuck with one carrier. You will eventually stagnate.

As usual you fail to look at the big picture. You are looking at one device on one carrier and suggesting that it will always be that way. You also aren't considering that the Storm/Thunder, RiM's direct competitor to the iPhone, and other higher-end devices also have exclusive deals with carriers.

[teckstud]

Originally Posted by cameronj

Clearly a good sale. More importantly, did you buy something that dropped less than 50% in the meantime? Because if you bought a tech company, you probably would have done better to hold RIMM. I'm just glad I bought RIMM at $35

Yeah -I bought APPLE at $90.

[solipsism]

Originally Posted by cameronj

Clearly a good sale. More importantly, did you buy something that dropped less than 50% in the meantime? Because if you bought a tech company, you probably would have done better to hold RIMM. I'm just glad I bought RIMM at $35

I bought some non-tech stocks earlier this year after some major drops. So far so good.

[Cubert]

Halo effect.

[teckstud]

Originally Posted by solipsism

As usual you fail to look at the big picture. You aren't considering that the iPhone is officially available on more carriers than the BlackBerry. You aren't considering that the Storm/Thunder, RiM's direct competitor to the iPhone, and other higher-end devices also have exclusive deals with carriers.

Now I know for a fact that you are certifiably crazy- How many Blackberries are there that are on how many different US carriers alone vs. the iPhone exclusivity in the US with only AT&T? We're talking RIM -not STorm/Thunder.

Keep drinking those Kool-Aid shots. It is Thursday night.

[solipsism]

Originally Posted by teckstud

Well there were some positive posts on here.

I know you like being the forum's pooh flinging, dancing monkey boy, but it would be nice if you actually added a useful post to the thread every now and then. Maybe some insight into what you think RiM will do in the future.

[TenoBell]

I have a friend who recently bought two BB Storm's for he and his wife. Verizon had a buy one get one free sale.

Originally Posted by anantksundaram

I conjecture that they've had to do some aggressive price discounts to gain share (Apple may have a cost issue with new product intros, but almost never a pricing problem coming right out of the gate).

[teckstud]

Originally Posted by solipsism

I know you like being the forum's pooh flinging, dancing monkey boy, but it would be nice if you actually added a useful post to the thread every now and then. Maybe some insight into what you think RiM will do in the future.

As opposed to bashing RIM as you just did and/or anything other than Apple as you invariably always do?

[anantksundaram]

Before we go off on a RIM love-fest here, let's recognize that RIM is by far - and has been for a while - the favorite of corporations and their IT folks. So we are also comparing oranges and apples when we compare Blackberrys and iPhones and the size/scope of their relevant market segments. (That's also the reason BBs are available on multiple carriers).

That said, as a stock, as cameronj observes, it was very good buy at $35. But at $60? That gets a little iffy-er....

[TenoBell]

I know you want to ignore this fact, but it still has to be acknowledged. Even with many more models and carriers, RIM's sales are not much better than Apple's with one phone and one carrier.

Originally Posted by teckstud

Now I know for a fact that you are certifiably crazy- How many Blackberries are there that are on how many different US carriers alone vs. the iPhone exclusivity in the US with only AT&T? We're talking RIM -not STorm/Thunder.

Keep drinking those Kool-Aid shots. It is Thursday night.

[teckstud]

Originally Posted by TenoBell

I know you want to ignore this fact, but it still has to be acknowledged. Even with many more models and carriers, RIM's sales are not much better than Apple's with one phone and one carrier.

That's now and I actually agree with you , but how can you not think that being locked into AT&T is not a disadvantage going into the future?

[anantksundaram]

Originally Posted by solipsism

I know you like being the forum's pooh flinging, dancing monkey boy, but it would be nice if you actually added a useful post to the thread every now and then. Maybe some insight into what you think RiM will do in the future.

Heh heh... while I can't disagree with your sentiments, I am surprised that you continue to let this guy pull your chain.....

[solipsism]

Originally Posted by teckstud

As opposed to bashing RIM as you just did and/or anything other than Apple as you invariably always do?

Where exactly did I bash RiM? Stating the fact that they haven't rebounded as well as other tech companies I follow? Stating that will have change their business model to compete in a future of many Exchange capable smartphones that will do essentially what RiM offers without the extraneous costs in a worldwide recession? Stating that they have a great product, I expect there sales to grow and that I hope they have a solid long term plan? Stating that I made a bundle off RiM selling at nearly their highest point before the market drop?

[solipsism]

Originally Posted by anantksundaram

Heh heh... while I can't disagree with your sentiments, I am surprised that you continue to let this guy pull your chain.....

My features aren't ruffled. I will get to a point and put him on my ignore list simply because he constantly detracts from the thread. He's here enough that I wish he would add something useful. I don't care if I agree or disagree with posters so long as their posts actually add to the conversation.

[trumptman]

Originally Posted by TenoBell

I know you want to ignore this fact, but it still has to be acknowledged. Even with many more models and carriers, RIM's sales are not much better than Apple's with one phone and one carrier.

Apple choose this approach so it is silly to say someone else shouldn't benefit from making a choice Apple refuses to make. Apple simplified their approach and that has some benefits and drawbacks as you note. The same is true for the RIMM decision.

[teckstud]

Originally Posted by solipsism

Where exactly did I bash RiM? Stating the fact that they haven't rebounded as well as other tech companies I follow? Stating that will have change their business model to compete in a future of many Exchange capable smartphones that will do essentially what RiM offers without the extraneous costs in a worldwide recession? Stating that they have a great product, I expect there sales to grow and that I hope they have a solid long term plan? Stating that I made a bundle off RiM selling at nearly their highest point before the market drop?

Please, your whole post was spinning doom and gloom for RIM while other posts on here have been very gracious. Now you're trying to weasle your way out of your prior post?

[TenoBell]

It depends on execution. If Apple and AT&T can offer people a compelling enough service then it may not matter. Since all of the carriers follow somewhat different business models, there is no guarantee Apple will automatically repeat its success with someone else.

As I've mentioned before if it were left up to Verizon there would have been no iPhone.

Originally Posted by teckstud

That's now and I actually agree with you , but how can you not think that being locked into AT&T is not a disadvantage going into the future?

[melgross]

Originally Posted by anantksundaram

Oh, I don't disagree. The fact that profit does not rise in proportion to sales with a new product is fairly obvious. It seems to me, however, that 84% v. 26% is rather low profit leverage on the incremental sales. I conjecture that they've had to do some aggressive price discounts to gain share (Apple may have a cost issue with new product intros, but almost never a pricing problem coming right out of the gate).

But they did maintain 40% gross margins. That's compared to what some people here constantly decry as Apple's "excessive" margins of about 34%.

[JimDreamworx]

Surge? Nortel tripled last week and nobody bought this lottery ticket?

It was fun while it lasted...

[melgross]

Originally Posted by teckstud

That's now and I actually agree with you , but how can you not think that being locked into AT&T is not a disadvantage going into the future?

It IS a disadvantage.I don't think anyone is denying that.

The point being made is that DESPITE that fact, Apple did well. Now that they are in almost 80 countries, that fact is less of a drag than it was before. It seems that Apple has made a deal in China as well, so we'll see.

But, as has been stated in a number of articles, once LTE is available to both AT&T and Verizon, sometime in 2010, we may see the iPhone moving over there some time soon after.

I wouldn't worry about T-Mobile because it's pretty small, and has a very poor 3G service right now, which stupidly, is not compatible with any other major 3G service, as AT&T's is. Sprint is hemorrhaging badly, and who knows what that will mean in another year or two?

I think Apple has planned its rollout well. It's gotten time to work out hardware and software needs along the way.

[teckstud]

Originally Posted by TenoBell

It depends on execution. If Apple and AT&T can offer people a compelling enough service then it may not matter. Since all of the carriers follow somewhat different business models, there is no guarantee Apple will automatically repeat its success with someone else.

As I've mentioned before if it were left up to Verizon there would have been no iPhone.

BUt the more carriers the greater the pentetration. People simply will not switch regardless if their carrier is inferior or whatever. The iPhone would have already had MMS texts and MMS pics plus video if it had been on Verizon on the other hand not to mention a better connection.

[solipsism]

Originally Posted by melgross

I wouldn't worry about T-Mobile because it's pretty small, and has a very poor 3G service right now, which stupidly, is not compatible with any other major 3G service, as AT&T's is.

The FCC made them bid for a different spectrum. I know T-Mo didn't want to use that atypical frequency.

[melgross]

Originally Posted by teckstud

BUt the more carriers the greater the pentetration. People simply will not switch regardless if their carrier is inferior or whatever. The iPhone would have already had MMS texts and MMS pics plus video if it had been on Verizon on the other hand not to mention a better connection.

The connection quality I can't argue about, but we really can't make any statements about MMS. No one knows that. Same thing with video.

[melgross]

Originally Posted by solipsism

The FCC made them bid for a different spectrum. I know T-Mo didn't want to use that atypical frequency.

They weren't made to bid on it. They failed to buy up other spectrum earlier. They had to bid on what they could.

[hittrj01]

Originally Posted by teckstud

Not as long as you're stuck with one carrier. You will eventually stagnate.

I agree with your point, but Apple has always made it a point (sometimes to an extreme) to make things as simple as possible and have always had a "one size fits most" approach to things. They have 3 laptops and 3 desktops (with minor variances within each line), 4 iPods (but all are used in generally the same way, ie. iTunes), and one phone with one carrier.

I do think making a CDMA phone for Verizon and Sprint would increase sales here in the States, but I believe Apple is trying to get the platform as wide ranging and mature as possible with their one GSM model world-wide, and then worry about the rest of the market later. Remember, we are only still less than 2 years removed from the original iPhone release, a relative infant when it comes to handset platforms, and look how far it's come in that time. I believe once Apple has fleshed this platform out to an acceptable level (for them), then, and only then, will they start considering making different models and working with different carriers. Until then, 1 carrier per country makes things a lot simpler than 3 or 4 per country.