Blackberry maker Research in Motion saw its subscriber base rise past the 2.5 million mark during its most recently completed fiscal quarter, Q4 FY2005, as service and software revenues began to slow the company's dependence on hardware sales.

However, the effect of the company's legal battle with NTP hit earnings hard, though some canny accounting eased the pain.

For the three months to 26 February 2005, RIM recorded revenues of $404.8m, up 11 per cent on the previous quarter and 92 per cent on Q4 FY2004. Some 66 per cent of the quarter's revenue arose from sales of Blackberry hardware, down from 71 per cent in Q3. Of the rest, 17 per cent came from service deals - the same as the previous quarter - but software-derived revenue jumped from seven per cent of the total last quarter to 14 per cent in Q4.

That suggests RIM is indeed winning the support of rival handset vendors. RIM's hardware revenue has been climbing steadily through recent quarters, increasing the extent to which it competes with the very handset manufacturers it's been trying to court with software deals. Increasing its software revenue will not only make such sales easier - in effect it becomes less of a direct competitor - but steers the company towards better long-term revenue opportunities.

RIM lost $2.6m during the quarter (one cent a share) on a GAAP basis, as it forked out $294.2m and a separately accounted for $20m to cover what it owes NTP for the settlement of the two firms' long-running patent infringement fight. Some tax jiggery-pokery resulted in a gain of $151.6m, which along with the company's operating income, also helped reduce the quarterly net loss.

Of course, playing the deferred tax asset card now means the company will have to cough up in later quarter, essentially by paying a higher rate. But at least it won't have the NTP settlement debt hanging over its head, and rising revenues (it hopes) will ease the burden. It ended the quarter with $1.7bn in the bank.

For the year as a whole, RIM reported a GAAP net income of $213.4m (109 cents a share), up from $51.8m (31 cents a share) the previous year. Revenue for the year was up 127 per cent from $594.6m to $1.35bn.

RIM quit the quarter with 2.51 million subscribers, 470,000 more than it had at the end of Q3 and 135 per cent more than FY2004's tally of 1.07m.

FY2005's user total will increase by 560,000-590,000 during Q1 FY2006, RIM forecast, contributing to revenues of $430-455m. Q2 FY2006 revenues are likely to fall between $460m and $485m, it added. Earnings will range from 51-56 cents a share in Q1, to 57-63 cents a share in Q2, the company predicted, no doubt encouraged by the deals it can go on to do in the US now it's no longer operating under NTP's shadow. ®

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