BlackBerry Storm, Bold Boost RIM In Q3

In a conference call discussing RIM's third-quarter financial earnings, RIM co-CEO Jim Balsillie said third-quarter fiscal 2009 revenue was $2.78 billion, up 7.9 percent from $2.58 billion in the previous quarter and up 66.3 percent from $1.67 billion in the third quarter last year.

Despite strong competition and the shaky economy, RIM hit its adjusted revenue forecast, which it lowered on Dec. 6. At the time, cut its third-quarter forecast and lowered its expected quarterly revenue to between $2.75 billion and $2.78 billion, a drop from the previously predicted revenue range of $2.85 billion to $3.10 billion. RIM also adjusted earnings to 81 cents to 83 cents per share, as opposed to the 89 cents to 97 cents per share it initially forecast. RIM also noted that it expected subscriber accounts to be about 10 percent below expectations, hitting around 2.6 million instead of the 2.9 million it anticipated.

Overall in the third quarter, RIM saw 81 percent of its revenue come from devices, while 13 percent came from services, 2 percent from software and 4 percent other. All told, RIM shipped about 6.7 million devices in the third quarter.

Balsillie credited RIM's strong results to the host of hot new devices RIM released during the quarter, including the BlackBerry Storm 9000, the BlackBerry Pearl Flip 8220 and the BlackBerry Storm, its first-ever touch-screen smartphone and RIM's official shot across the bow of other touch-screen titans like the Apple iPhone 3G and the Google Android-based T-Mobile G1. RIM is also putting the finishing touches on the U.S. version of the BlackBerry Curve 8900, also known as the BlackBerry Javelin, which has just been released in Canada and parts of Europe.

Balsillie, however, added that the true impact of the new devices, which in some cases were plagued by delays and limited supply, won't be evident until the fourth quarter. Balsillie said in the fourth quarter RIM expects to ship 7.5 million to 8 million devices, bumping RIM's revenue to $3.3 billion to $3.5 billion, a wider guidance RIM pinned on the uncertain economic conditions and the fluctuation of international currency values.

Along with the hot new devices, Balsillie said RIM experienced record sales on Black Friday, fueled mainly by the BlackBerry Storm, which also helped it buck the downward economic spiral spurred on in part by waning consumer confidence.

"We are pleased to report record revenue results for the third quarter and we have entered the fourth quarter with strong momentum despite the challenging general economic conditions," Balsillie said. "In fact, we have enjoyed our best-ever start to the holiday buying season over the past few weeks. RIM launched an unprecedented number of BlackBerry smartphones in the third quarter and these new products are being adopted at an even faster pace than we expected. Our industry-leading product portfolio is positioned well to capitalize on the increasing market opportunity in the fourth quarter of fiscal 2009 and beyond."

RIM's results come as major research firms predict a dip in smartphone sales in 2009. Gartner predicted in November that the sales of mobile phones will dip between 1 percent and 4 percent globally in 2009, despite 308 million phones shipping in the third quarter. Research firm IDC also predicted that mobile phone shipments will drop more than 2 percent next year compared to this year, that market's largest drop since 2001. IDC said the global economy will lead to the downturn, while smartphones specifically will see about 9 percent growth globally next year, partially due to reduced handset prices.

RIM is also facing tougher competition in its once-niche market. A November report released by Canalys showed that in the third quarter of 2008 Apple and its iPhone captured 17.3 percent of the of the smartphone market, placing it second in the world, bumping RIM to third place with 15.2 percent of the market despite an 83.5 percent market share surge. Both Apple and RIM are still gunning to take over the market dominated by Nokia, which leads the pack with a 38.9 percent share of the smartphone market.