Research In Motion announced their Q2 results for fiscal 2011 tonight. Here are the highlights:
- Revenue grew 31% over the same quarter last year to $4.62 billion
- Earnings per share in the second quarter increased 76% to $1.46 over the second quarter last year
- BlackBerry smartphone shipments grew more than 45% over the same quarter last year to 12.1 million and RIM has shipped approximately 115 million BlackBerry smartphones to date
- BlackBerry subscriber account base grew approximately 56% (4.5 million) over the prior year to over 50 million
- Revenue for the third quarter of fiscal 2011 ending November 27, 2010 is expected to be in the range of $5.30-$5.55 billion. Gross margin for Q3 is expected to be approximately 42%.
The results were above the guidance RIM had issued a few months ago, and even predictions made by analysts; that has investors excited, and those who had downgraded are probably feeling just a little embarrassed. Here are a few analyst reactions.
“There’s no way around it. We got revenue on the high end of guidance. Things are not falling apart.” – Colin Gillis, BGC Financial
“This is a nice surprise on the upside. Revenue was better, EPS was better, units were better both for the current quarter, as well as the November quarter guidance.” – Matthew Thorton, Avian Securities
“Clearly a lot of the channel checks that were done during the quarter were not done very well.” – Todd Coupland, CIBC World Markets
“[Lower than expected net subscriber additions] was really the only weak spot here, but that is more than compensated from just really strong results across the board and really strong guidance for next quarter.” – Dushan Batrovic, Dundee Securities
“We remain positive on the stock and view this quarter as a big step toward improving sentiment.” – Tim Long, BMO Capital Markets
“Torch launched late in the quarter, in one country with one carrier. Even if had done fantastic it wouldn’t have changed the numbers that much.” – Daniel Ernst, Hudson Square Research
It’s been a busy quarter for RIM, characterized by a rash of security concerns and the launch of the BlackBerry Torch 9800 with a new operating system. During the financial conference call, co-CEO Jim Balsillie was confident about being able to resolve any outstanding issues with the governments of the world, and was feeling good about upcoming international launches of the BlackBerry 9800, despite a lukewarm reception. The rest of 2010 promises to be busy with a few more launches in the wings, along with the usual busy seasons of Black Friday and the holidays.
Balsillie promised that BlackBerry 6 Desktop Software for Mac would be available in a couple of months, and that we would see some cool stuff on from Widgets (BlackBerry’s web language-based programming environment) at the Developer Conference coming up soon. There was also more talk about user-liable devices, where employees could bring in their own BlackBerrys and use them as personal as well as work devices with solid dividers keeping corporate data secure. Balsillie spoke positively about the growing interest in prepaid BlackBerry services, and says they’re starting to do well in the EMEA region.
The Q&A portion of the call struck a few interesting notes. One analyst asked about RIM’s strategy on specs, and why they aren’t pushing the boundaries a little bit harder. The Torch is an excellent case in point; it has the same screen resolution and processor as RIM’s two-year old Bold 9000, compared to some very high-end devices coming out from HTC, Motorola and others that are beating out their own old hardware quite quickly. To that, Balsillie replied that it’s “dangerous to frame this in a high-end arms race,” and that RIM’s primary concern is to “resolve the paradox” of being sensitive to limited resources on all fronts while still delivering rich experiences. He also stood by BlackBerry’s lineage for efficiency and that their current stance is to “not be strategically erratic.”
Another analyst wondered when service in China will get turned on “for real”, which is fair given RIM only has one reasonably new handset in the area right now. Balsillie replied that “global unique circumstances” are largely shaping their relationship with China, and they’re working to install powerful local infrastructure. He described RIM’s approach as “systemic and patient” as they are “committed to being good citizens.” Slow and steady wins the race, as they say.
Overall, Q2 was pretty solid, and the rest of the year is looking good enough that it’s easy to forget for a minute all of that research proclaiming Android as the new king of the smartphone castle.