RIM Rings Up a Decent Quarter

The BlackBerry maker saw its sales soar, but it still fell shy of Wall Street forecasts; an SEC probe of stock options casts a pall on shares

By the Associated Press, with BW Staff

There are lots of new BlackBerry thumb-peckers out there. Research In Motion (RIMM), the gadget's maker, on Apr. 11 reported a 66% surge in fiscal fourth-quarter sales as more than 1 million users joined the RIM rolls, pushing total subscribers to 8 million users.

Aided by such growth, RIM said it earned $187.9 million, or 99¢ per share, for the quarter, up from $18.4 million, or 10¢ per share, during the same period in the previous year. Revenue was $930.4 million, up from $561.2 million. Analysts, on average, were looking for earnings of $1 per share on sales of $935.4 million, according to a poll by Thomson Financial.

The results are preliminary, pending a restatement of past finances.

The Waterloo (Ont.)-based company also said it is now under a formal Securities & Exchange Commission investigation over its stock option granting practices. The company's shares plunged nearly 7% in after-hours electronic trading. Earlier, RIM shares settled at $146.02 on the Nasdaq, 1.5% lower, after setting a new 52-week high of $148.95. (For a video clip of BusinessWeek reporter Heather Green discussing RIM's results, click here.)

Second Inning

The company ended an ongoing voluntary internal review of its stock option practices in the fourth quarter. Two days after the quarter ended Mar. 3, RIM announced it would cut $250 million in miscounted funds from pre-2002 earnings reports. The company also announced that its chief executive, Jim Balsillie, would surrender the chairman's post.

For the full year, the company earned $634.5 million, or $3.33 per share, up from $382.1 million, or $1.96 per share, a year earlier. Annual revenue rose 47%, to $3.04 billion, from $2.07 billion.

In a conference call with analysts, Balsillie said RIM has 270 carriers worldwide and the BlackBerry Pearl is selling well, indicating that the company's strength in the U.S. corporate wireless market is also carrying over to consumer-oriented products. "We couldn't be more excited for the next 10 years," Balsillie said. "We feel like we're on the second inning of a nine-inning game.…In my view you're just going to see a turbocharging in all aspects of functionality, in devices and partnerships and every aspect of the business through the rest of this year."

RIM said it sees fiscal first-quarter earnings between 99¢ and $1.07 per share, on sales of between about $1.03 billion and $1.08 billion. Analysts are expecting income of $1.04 per share on sales of $1 billion.