When you're a small country stacked right up against the mighty U.S., you tend to take pride in any success by a fellow countryman. Such is Canada's fate, and if you ask any Canadian, he will be able to name you all the Canadian actors who made it in Hollywood. Similarly, ask about successful companies and Canadians will proudly mention Research in Motion Ltd. (NASDAQ: RIMM). Indeed, the company did not disappoint this afternoon when it reported that fiscal fourth-quarter profit and sales more than doubled.
The BlackBerry maker earned $412.5 million, or 72 cents per share, up from a profit of $187.4 million, or 33 cents per share, in the same period a year earlier. Revenue more than doubled to $1.88 billion from $930 million. This beat expectations of 70 cents per share and sales of $1.86 billion. And that's not all. A key figure, subscriber base, was boosted as RIM shipped about 4.4 million of its smartphones and added 2.2 million new subscriber accounts during the quarter, bringing its total subscriber base to more than 14 million. Sure enough, the company also projected profit and sales for this quarter above analysts' estimates. One cause for concern is RIM's contracting gross margin as the company relies more on hardware sales.
According to the company, it was retail presence as well as an expanded product line that included enhanced smartphones with cameras and music-playing capabilities, like the Curve, that helped boost sales. While such features put it in competition with Apple Inc. (NASDAQ: AAPL)'s iPhone, Apple was already adding improved features to the iPhone to attract business customers, so it seems competition was inevitable. RIM plans to have even more products with more features to appeal to consumers. Despite the competition, according to different research firms, both RIM and Apple are increasing their market share in the smartphone segment for now, mostly at the expense of Palm Inc. (NASDAQ: PALM).
And if you think RIM has reached a saturation point, let me remind you that two-thirds of its customers are in North America. There is still a big world to expand to out there. In fact, global expansion has already contributed to its performance in the fourth quarter.
It's no surprise RIMM shares are up some 4.7% in after-hours trading.
RIM's Q4 profit soars, shares up in after hours
Posted Apr 2nd 2008 5:45PM by Melly Alazraki
Filed under: Earnings reports, Products and services, Consumer experience, Competitive strategy, Apple Inc (AAPL), Research in Motion (RIMM), Palm Inc (PALM)
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Reader Comments (Page 1 of 1)
4-02-2008 @ 6:19PM
NewsVisual said...
Sprint will soon also be a rival. In an effort to capture some lost marketshare from the iPhone by Apple Inc and its telecom rival AT&T Inc, Sprint announced on Tuesday that it was teaming up with cell phone-maker Samsung to launch their own smart phone, which will flaunt many of the same features as the rival iPhone. Sprint’s new cell phone will be called the Samsung Instinct. Like the deal of its rivals, Sprint will have an exclusive servicing relationship with the Instinct. Despite this new product initiative by the two companies, however, investors will wonder whether it’s enough to help Sprint reverse its mass desertions by customers to other carriers and its huge earnings losses. Investors will also question whether Sprint has a strategic plan in place to help bring around the company’s turnaround.