October 4, 2007 / 8:16 PM / 12 years ago

RIM tops profit forecasts, predicts more strength

TORONTO (Reuters) - BlackBerry maker Research In Motion Ltd RIM.TO RIMM.O reported a second-quarter profit on Thursday that beat expectations, as it broke the 10-million subscriber mark and predicted strength for the rest of the year.

A shareholder uses his Blackberry while waiting for the Research In Motion annual meeting to begin in Waterloo, July 17, 2007. REUTERS/J.P. Moczulski

RIM said it earned $287.7 million, or 50 cents a share, for the three months ended September 1. That was up from a profit of $140.2 million, or 25 cents a share, in the same period a year earlier.

It also said it added 1.45 million subscribers in the quarter — better than what it predicted in June — to hit a total of about 10.5 million. It said more than 3 million of its devices were shipped in the quarter.

For the upcoming third quarter, RIM forecast revenue of between $1.6 billion and $1.67 billion and earnings per share of between 59 and 63 cents. It said it expects to add about 1.65 million new subscribers.

The results for the second quarter were better than the top end of the outlook that RIM gave investors in June. The third-quarter forecast also handily beat analyst expectations, according to Reuters Estimates.

“We think that the space is growing a lot, this is the category leader — new devices, new international coverage — and the guidance is very, very good,” Canaccord Adams analyst Peter Misek said shortly after the results were released.

RIM said its revenue in the quarter rose 108 percent to $1.37 billion from $658.5 million in the same period a year earlier.

“This outperformance was driven by the strong product cycle we’re in the midst of, as well as the diversification of our user base across multiple geographies and multiple market segments,” RIM co-Chief Executive Jim Balsillie said during a conference call with analysts.

Balsillie said the usual summer slowdown did not affect the second-quarter results because of strong demand for new products, including the BlackBerry Curve and its multimedia-heavy BlackBerry Pearl smartphones.

The BlackBerry is now available from about 325 carriers around the world and RIM has now shipped its 20 millionth device, he added.

The company continued its push into the retail market during the quarter. While the BlackBerry is a staple for many executives, lawyers, politicians and other professionals, RIM has yet to penetrate the broader consumer market to the same degree.

Balsillie said that in North America, non-corporate subscriber account additions exceeded 50 percent of net additions for the first time — a sign that the effort is catching hold.

The company has also been working to enter China. While its service is available, its handsets are not. Balsillie said the company continues to work on changing this and hopes to be able to give an update “shortly.”

The Waterloo, Ontario-based company’s shares dipped initially in after-hours trading, but quickly rebounded to trade in line with its regular-session Nasdaq close of $100.54, up 4.42 percent on the day.

On the Toronto Stock Exchange, the shares added C$4.28 to finish at C$100.30.

The results did not please all observers: for example, at least one analyst expected the company to forecast 1.69 million subscriber additions for the third quarter — even more than the 1.65 million RIM said it expects.

$1=$1 Canadian

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