RIM shares surge as BlackBerry sales hit record 7.8 million

Posted:
in General Discussion edited January 2014
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.
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Comments

  • Reply 1 of 64
    hittrj01hittrj01 Posts: 753member
    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!
  • Reply 2 of 64
    italiankiditaliankid Posts: 279member
    Go rim!
  • Reply 3 of 64
    tenobelltenobell Posts: 7,014member
    good for RIM
  • Reply 4 of 64
    nasseraenasserae Posts: 3,152member
    Excellent. Business is not as bad as everybody thought.
  • Reply 5 of 64
    melgrossmelgross Posts: 31,335member
    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.
  • Reply 6 of 64
    anantksundaramanantksundaram Posts: 18,886member
    deleted post
  • Reply 7 of 64
    anantksundaramanantksundaram Posts: 18,886member
    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.....
  • Reply 8 of 64
    melgrossmelgross Posts: 31,335member
    Quote:
    Originally Posted by anantksundaram View Post


    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.
  • Reply 9 of 64
    teckstudteckstud Posts: 6,476member
    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.
  • Reply 10 of 64
    tenobelltenobell Posts: 7,014member
    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.



    Quote:
    Originally Posted by melgross View Post




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



  • Reply 11 of 64
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by TenoBell View Post


    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.
  • Reply 12 of 64
    anantksundaramanantksundaram Posts: 18,886member
    Quote:
    Originally Posted by melgross View Post


    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).
  • Reply 13 of 64
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by TenoBell View Post


    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.
  • Reply 14 of 64
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by solipsism View Post


    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.
  • Reply 15 of 64
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by solipsism View Post


    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
  • Reply 16 of 64
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by teckstud View Post


    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.
  • Reply 17 of 64
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by cameronj View Post


    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.
  • Reply 18 of 64
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by cameronj View Post


    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.
  • Reply 19 of 64
    cubertcubert Posts: 728member
    Halo effect.
  • Reply 20 of 64
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by solipsism View Post


    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.
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