RIM (RIMM) Earnings: Santa Loves Blackberry

December 18, 2008 by Douglas A. McIntyre

Cammonopoly_wideweb__430x3250RIMM had already told Wall St. what to expect for the quarter. Two weeks ago the company forecast $.81 to $.83 per share, excluding one-time items, on sales of $2.75 billion to $2.78 billion for the period just past.

What investors wanted to know is what the next quarter and 2009 would look like.

Traders expected bad news, selling RIMM shares down by over 5% today to $38.44, near their 52-week low and down from the period high of $148.13.

RIMM refused to succumb to the forces of the recession and posted a set of numbers that lightened the days for the financially depressed. The stock immediately jumped to $41.40 after hours.

For its fiscal third quarter, RIMM had revenue of $2.78 billion, up 7.9% from $2.58 billion in the previous quarter and up 66.3% from $1.67 billion in the same quarter of last year.

Net income was $396.3 million, or $.69 per share, compared with net income of $495.5 million, or $.86 per share, in the prior quarter and net income of $370.5 million, or $.65 per share, in the same quarter last year.

Approximately 2.6 million net new BlackBerry subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base increased from the prior quarter by approximately 14% to approximately 21 million.

Guidance is what put smiles on all the faces. Revenue for the fourth quarter of fiscal 2009 ending February 28, 2009 is expected to be  $3.30-$3.50 billion. Net subscriber account additions in the fourth quarter are expected to be approximately 2.9 million. Earnings per share for the fourth quarter are expected to be in the range of $.83-$.91 per share based on a gross margin of between 40-41%, a tax rate of 29-30% and operating expenses that are approximately 2% lower as a percentage of revenue than in the third quarter. Based on current expectations for product mix and device average selling prices, RIM expects gross margins in fiscal 2010 to be similar to or slightly better than Q4.

Douglas A. McIntyre