Research In Motion Ltd. ended the year with several potentially significant announcements, including a long-awaited reorder contract with BellSouth Wireless Data L.P. and the opening of a new research and development facility.
BSWD was the first and historically largest buyer of RIM’s Interactive Pager 950 two-way wireless data device. When the two did not renew the supply contract last fall, analysts lowered their expectations on RIM’s third-quarter earnings.
But the company announced it signed a new agreement with BSWD for 100,000 units scheduled to begin shipping in April. Analysts valued the contract at $30 million.
BSWD uses the device for its Interactive Paging Service. The company has not revealed current subscribers.
However, BSWD no longer represents the bulk of RIM’s distribution and the new contract is just one of several expected to bolster RIM sales this year. RIM has formed resale agreements with Dell Computer, Paging Network Inc., SkyTel and Internet service provider espernet.com.
Looking forward, ISP distribution is expected to increase dramatically for RIM’s BlackBerry e-mail forwarding service, which uses the 950 device and resells service from BSWD. Ten ISPs are said to be testing BlackBerry and several new service contracts are expected by the end of fiscal 2000.
As much of this potential is seen as long-term, analysts have lowered their fourth-quarter revenue estimates to $37 million, from $46 million. RIM’s stock price has fallen since the news, from $46.25 the day of the company’s third-quarter earnings release to $41.50 at RCR press time.
Meanwhile, RIM opened a new research and development facility in Kanata, Ontario, in the heart of Canada’s high-tech community in the Ottawa region. Engineering teams at the facility will complement those at RIM’s headquarters in Waterloo, Ontario, the company said, and will continue to focus on wireless data technology.
For the third quarter of fiscal 2000 ended Nov. 30, RIM reported revenues of $23.7 million, 35 percent more than the $17.5 million reported for the same period last year.
Net income totaled $3.2 million, or 5 cents a share, compared with income of $2.8 million, also 5 cents a share, for the same time the previous year.
Over the course of the quarter, RIM issued a secondary offering of 5.6 million common shares, closing for net proceeds of $162.5 million.
The company named the BlackBerry product and service as its lead revenue catalyst, with more than 1,800 companies adopting the service.
“BlackBerry seems to have hit a real inflection point,” said Dennis Kavelman, RIM chief financial officer. “As existing customers make BlackBerry more pervasive within their organizations and as new sales and distribution channels are brought on, we expect BlackBerry to ramp quickly.”
