Somehow, some way, Wall Street was surprised that Research in Motion Ltd. (NASDAQ: RIMM) reported worse-than-expected earnings. Based on all the corporate layoffs, this should have been expected. Where this gets interesting its that its activations grew.
R-I-M now expects its fourth-quarter revenue to come in at or near the mid-point of its previously disclosed range, yet its earnings per share will be at the low end of its forecasts. Margin targets are also being taken down.
First Call consensus were $0.86 and about $3.4 billion in revenue. R-I-M also now expects BlackBerry net subscriber account additions to be more than 20% higher than the 2.9 million net subscriber account additions forecasted on Dec. 18.
R-I-M apparently had record a level of net subscriber account additions in December and it has seen strong continued orders. This is what was surprising to us. We had expected this to remain soft as unemployment continues to climb.
The retail smartphone market has become crowded. On the corporate side, R-I-M’s Blackberry is still by far the device of choice from what we have seen.
R-I-M shares are down almost 12% at $50.25 in very active pre-market trading. The company’s stock was still up over the last five days despite its big drop yesterday with the market.
In no way can we say that this is good news, but frankly this looks better than what we expected.
Jon C. Ogg
February 11, 2009
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