Wednesday, March 17, 2010

Research In Motion Ltd. (NASDAQ: RIMM): Q4 Earnings Preview 2009

Research In Motion Ltd. (NASDAQ: RIMM) is scheduled to release financial results for the fiscal fourth quarter 2009 after the closing bell on Wednesday, March 31, 2010. Analysts, on average, expect the company to report earnings of $1.27 per share on revenue of $4.30 billion. In the year ago quarter, the company posted earnings of 90 cents per share on revenue of $3.46 billion. The company has a long history of beating earnings estimates and having those estimates revised higher as the year progresses.

Research In Motion Limited is a leading designer, manufacturer, and marketer of wireless smart phone and related services. RIM generates most of its revenues through the sale to carriers of its wildly popular BlackBerry smart phone, which has become a common choice for corporate customers around the world.

In the preceding third quarter, the Waterloo, Canada-based company posted net income of $628.4 million or $1.10 per share for the third quarter, up 53% from $396.3 million or $0.69 per share in the prior year quarter. Quarterly revenue increased 41% to $3.92 billion from $2.78 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $1.04 per share on revenue of $3.78 billion. About 82% of RIM's revenue came from devices, 14% from service, 2% from software and 2% from other revenue. During the third quarter, RIM shipped about 10.1 million devices, including its 75 millionth BlackBerry smartphone. RIM noted that about 4.4 million net new BlackBerry subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base was about 36 million.

For the fourth quarter, RIM expects earnings in the range of $1.23 to $1.31 per share and revenue in the range of $4.2 billion to $4.4 billion. Gross margin for the fourth quarter is expected to be about 43.5%. The company targets an addition of 4.4 million to 4.7 million new subscriber accounts in the fourth quarter.

The company is poised to benefit from a strong holiday quarter. According to analysts at ABI Research, smartphone sales surged 25 percent in the fourth quarter of 2009 compared to sales in the previous quarter. Recently, research firm ComScore issued a quarterly report that showed BlackBerry grew its market presence by 1.7 points to 43 percent.

In terms of stock performance, Research In Motion shares are up 93% over the past year.

Full Disclosure: None.
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