RIM posts sales jump, gives weak outlook

The BlackBerry maker faces increased competition from Apple and Palm.

By Elizabeth Strott Jun 19, 2009 9:04AM

Research In Motion (RIMM) late Thursday posted what looked like a strong earnings report, but the BlackBerry maker gave a weak revenue forecast for the current quarter.

 

Shares were down $3.77, or 4.9%, to $72.78 this afternoon.

 

RIM earned $643 million, or $1.12 per share, in its fiscal first quarter, a 33% increase from the $482.5 million, or 84 cents per share, it earned in the same period last year. Excluding one-time items, Research In Motion said it would have earned 98 cents per share, topping analysts' estimates of 94 cents per share.

 

Revenue surged 53% to $3.42 billion, in line with Wall Street's expectations. 

 

The company added 3.8 million subscribers in the quarter, pushing its total to almost 29 million. But that was below the 3.9 million analysts had expected.

 

On Wednesday, Research In Motion Co-Chief Executive Officer Jim Balsillie said the company has more than 1 million government clients.

 

And the company said on Tuesday that it will introduce its BlackBerry Tour this summer.  

 

For the second quarter, which ends Aug. 29, RIM expects revenue of between $3.45 billion and $3.7 billion and earnings per share of between 94 cents and $1.03.

 

It sees its subscriber base growing by 3.8 million to 4.1 million. Analysts are forecasting earnings of 97 cents a share on revenue of $3.61 billion.

 

RIM faces competition from Apple (AAPL), which introduced a new version of its popular iPhone, and Palm (PALM), which debuted its new Pre earlier this month. The lower-than-expected subscriber growth may mean Apple and Palm are starting to have an effect on RIM.

 

Shares of Apple were up $3.60, or 2.7%, to $139.48 this afternoon, and Palm shares had risen 87 cents, or 6.7%, to $13.93.

 

"The pressure on RIM is growing," Nirav Parikh, equity analyst at TCW Group, told Bloomberg News. "It's not just (Apple's) iPhone anymore, but a second competitor that is possibly even better than the iPhone operating system," Parikh said, referring to Palm's new Pre device.

 

Still, BlackBerry dominates the handheld market, with about 55.3% share of the market in the first quarter, according to IDC data. The iPhone had 19.5% of the market.

 

Piper Jaffray analyst Gene Munster is forecasting Apple will sell 500,000 of its iPhone GS this weekend, about half as many as the iPhone 3G had in its July 2008 debut, according to Bloomberg News.

 

Charley Blaine contributed to this report.

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