* RIM Q3 EPS $1.74 vs average analyst estimate $1.65
* Revenue of $5.5 billion, vs avg estimate $5.4 billion
* Ships 14.2 mln BlackBerrys, adds 5.1 mln subscribers
* Shares rise as much as 3 percent in after-hours trade
(Adds detail from conference call; In U.S. dollars)
By Alastair Sharp
TORONTO, Dec 16 Research In Motion's RIM.TO
Torch, a touchscreen challenger to Apple's iPhone, lifted the
BlackBerry maker's quarterly profit above analyst expectations
on Thursday, and the company forecast strong results for the
current holiday-season quarter.
RIM RIMM.O said net profit jumped 45 percent in its third
quarter as it leaned harder on growth from outside of North
America. Its shares rose as much as 3 percent in after-market
The Torch, which combines RIM's trademark mini-keyboard
with the glitzier touchscreen, shipped to more than 75 carriers
in the quarter after an August launch with AT&T (T.N) in the
United States. AT&T's half-price promotion from early November
also helped sales. [ID:nN09157390]
"The results look pretty good. For the current quarter they
definitely benefited from some new products. ... The guidance
also looks quite strong," said Shaw Wu, an analyst at Kaufman
Bros in San Francisco.
For RIM graphic r.reuters.com/hyp52r
For a Reuters Insider preview [ID:nRTV172556]
Interview with co-CEO Mike Lazaridis [ID:nN29230611]
For an instant view [ID:nN16243762]
That said, Wu took note of a nagging fear among investors
that RIM's long-term prospects are limited as it competes
against the likes of Apple (AAPL.O) and Google (GOOG.O), whose
Android software is used in devices made by Motorola MOT.N,
Taiwan's HTC Corp (2498.TW) and South Korea's Samsung
"There is some concern that (RIM's guidance) could be too
optimistic perhaps because of the ongoing pressure,
particularly from Android, in international markets," Wu said.
The Canadian company said it expects to earn between $1.74
and $1.80 per share in the December-to-February quarter,
sharply higher than analysts had expected. It expects revenue
between $5.5 billion and $5.7 billion.
For the most recent quarter, it reported net profit of
$911.1 million, or $1.74 per share, on revenue of $5.49
billion. The figures handily beat the average estimates of
analysts, who had expected earnings of $1.65 a share and
revenue of $5.4 billion, according to Thomson Reuters I/B/E/S.
RIM shipped 14.2 million BlackBerry smartphones in the
latest quarter, a figure that edged past average analyst
expectations and also snuck past Apple's most recent iPhone
numbers, a bone of contention between Apple's Steve Jobs and
RIM co-CEO Jim Balsillie.[ID:nN19153504]
RIM made its name with secure, reliable communications for
the world's business and government elites before branching out
into what is now a crowded consumer market.
Markets outside of North America accounted for 48 percent
of its subscriber base in the quarter. The company is targeting
emerging markets such as Latin America and Southeast Asia with
mid-priced devices and data plans, and "sticky" applications,
such as BlackBerry Messenger, a free instant messaging service
exclusiviely for users of the smartphones.
"There's clearly a big global market for communications
devices that have consumer features that are good enough," said
Matthew Robison at Wunderlich Securities in San Francisco.
Meanwhile, RIM's share of the North American smartphone
market has shrunk to about 27 percent from more than 50 percent
a year ago, according to Gartner Research. Android-powered
devices have exploded out of nowhere and lead the market.
RIM said just a third of its revenue came from the United
States in the quarter, compared to 57 percent a year ago, and
analysts do not expect a quick reversal in RIM's fortunes.
"The concerns for this name don't go away - they don't go
away with this quarter. What happens in the U.S. marketplace
when the iPhone hits Verizon? (What happens) when the cheaper
Android handsets start to crack into the international base,"
said Colin Gillis of BGC Partners in New York.
RIM added a net 5.1 million new subscribers, matching the
average forecast for this key metric that helps illuminate how
many sales are replacement devices for existing customers.
This is the last quarter RIM will routinely publish its net
subscriber additions, a measure with no direct comparison for
RIM's peers, which do not operate their own wireless network.
While RIM is wooing consumers in emerging markets, it is
also playing to its traditional strengths with the PlayBook
tablet, a 7-inch model that will go head-to-head with Apple's
iPad when it's launched next year.
The launch will likely coincide with updated versions of the
iPad and with Samsung's Android-powered Galaxy Tab.
During a conference call after Thursday's results, co-CEO
Jim Balsillie pointed to a March debut for the PlayBook. He
said the tablet would ship in the first quarter of the next
calendar year, but RIM would not book revenues from the device
in its fiscal fourth quarter ending Feb. 26.
Analysts expect between 1.3 million and 8.4 million
PlayBook sales for RIM's fiscal 2012.
RIM's share price has rallied since it launched the Torch
with a revamped browser and improved operating system in August
and showed off the PlayBook in late September. [IDnN27231916]
After regular market trading on Thursday, the New York-listed
shares rose to $60.58 from a $59.24 close before the results.
Balsillie, who along with co-CEO Mike Lazaridis was named
on Thursday as a co-chairman of the company, shrugged off
concerns about RIM's health, stressing mobile computing is in a
state of flux.
"I'm fine just letting the proof be in the deliverables,"
he said. "We do keep delivering and we're going to keep
(Additional reporting by Euan Rocha and Alex Dobuzinskis;
editing by Janet Guttsman and Frank McGurty)