RIM revenues rise

Anticipates rosier earnings ahead, too

By Tony Smith, 22nd December 2004

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Blackberry maker Research in Motion this week raised its performance expectations for the coming couple of quarters despite the prospect of its failure to defend itself against patent holder NTP's legal action.

Driving RIM's revised forecast were figures for the company third quarter of fiscal 2005. In the three months to 27 November 2004, RIM realised revenues of $365.9m, up 18 per cent on the previous quarter's $310.2m and 138 per cent on Q3 2004's $153.9m.

Net income for the period was $90.4m (46 cents a share), up 28.1 per cent on Q2's $70.6m (36 cents a share) and 454.6 per cent higher than Q3 2004's figure, $16.3m (ten cents a share).

Q3 2005's figure would have been higher still had RIM not set aside $24.6m to cover litigation expenses, it said. Fighting the legal battle with NTP cost the company a further 12 cents a share's worth of earnings.

RIM's revenues continue to be driven by sales of its Blackberry handhelds, which accounted for 71 per cent of the company's sales during the quarter, up slightly on Q2's share. Of the rest of RIM's Q3 revenue, 17 per cent came from service deals, seven per cent from software licences and five per cent from other sources.

During November this year, RIM announced its user-base had risen beyond 2m individuals. By the end of the quarter, the tally had grown to 2,044,000, up 387,000 on the previous quarter.

Looking ahead, RIM said it now expects the current quarter, Q4 FY2005, to yield sales in the region of $390-410m, up 6.6-12.1 per cent sequentially, both lower than the previous quarter-on-quarter jump. Despite that, Q4 earnings will fall between 54 cents and 48 cents, the company said, higher than previously forecast.

Q1 FY2006 will deliver 51-57 cents per share in earnings on sales of between $430m and $455m, RIM said. Without litigation expenses, the two quarters' incomes would come to 60-67 cents and 64-71 cents per share, respectively.

At the end of Q3, RIM had $1.64bn in cash and investments, up from $1.59bn at the end of the Q2. ®