RIM posts strong growth, analysts remain concerned

Famed Blackberry maker Research In Motion Ltd. saw its stock price dive more than 5% in early Thursday trading after the company posted fourth fiscal quarter results that fell short of analysts’ expectations and highlighted the increased competition entering the smartphone market.
For the quarter RIM said it added 4.9 million new subscriber accounts during the fiscal quarter, ending the fiscal year with more than 41 million accounts. The company added that it shipped 10.5 million devices during the quarter, which was short of the approximately 11 million forecast by analysts, and 37 million devices for the fiscal year.
RIM’s management cited strong sales through its domestic carrier partners during the quarter including strong support from Sprint Nextel Corp. for the Tour and Curve models, and strong enterprise support from Verizon Wireless and AT&T Mobility.
RIM said it expects device shipments of between 11.2 million and 11.8 million for the current fiscal quarter and between 4.9 million and 5.2 million new customer accounts.
Total revenues for the quarter were up nearly 18% from $3.5 billion in 2009 to nearly $4.1 billion in 2010. For the year, revenues surged more than 35% from $11.1 billion for the fiscal year ended Feb. 29, 2009, to nearly $15 billion this year.
Net income for the quarter increased 37% year-over-year from $518.3 million, a return of 90 cents per diluted share, to $710.1 million, or a return of $1.27 per diluted share. For the year, net income jumped nearly 30% from $1.9 billion, or a return of $3.30 per diluted share, to nearly $2.5 billion, or a return of $4.31 per diluted share.
Analysts seemed to express concern about increased competition RIM was seeing at domestic operators as a number of operators were becoming more aggressive with the rollout of devices sporting Google Inc.’s Android operating system. There is also concern regarding Apple Inc.’s update to its iPhone that is expected to be announced in June. Analysts note that while RIM remains the largest smartphone vendor in the world, the company is falling behind newer operating systems and with touch-screen devices that are increasing drawing the attention of the consumer market.
“Weak offerings in touch (phones) and 3G leave the company heavily exposed to a slew of new smartphones now hitting the market,” Charter Equity Research analyst Ed Snyder said in a note and posted in a Reuters story. “While it will certainly maintain its lead in e-mail-based smartphones, we see little chance it can sustain its market share, pricing or margins long-term.”