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    RIM's profits double  
    Toronto Star  
   

CHRIS SORENSEN

 
    October 05, 2007  
   

Research In Motion Ltd., maker of the popular BlackBerry email devices, more than doubled its second-quarter sales and earnings as the number of new non-business customers in North America eclipsed new corporate customers for the first time in the company's history.

Waterloo-based RIM said yesterday that the growth in the firm's consumer, or "non-enterprise" business, is being fuelled by growing mainstream popularity of so-called smartphones.

They combine data services such as wireless email and Web browsing alongside traditional cellphone functions.

"This is the first quarter where our (new subscriptions) ... for non- enterprise were bigger than the enterprise in North America," Jim Balsillie, RIM's co-chief executive, told analysts during a conference call after the markets closed.

"The enterprise business is growing very fast and the non-enterprise business is growing very, very fast."

RIM's bread and butter has historically been large corporation and government customers, but the consumer market is ripe for growth, Balsillie said.

The future holds more consumer-oriented BlackBerry devices like the Pearl and Curve, which combine wireless email and Internet capabilities with various multimedia functions, such as cameras and music players.

"It's a more elusive market, but we seem to be honing in on it really nicely," said Balsillie, adding that consumers now account for a third of RIM's total subscribers.

RIM said earnings for the second quarter rocketed to $287.7 million (U.S.), or 50 cents a share, compared with $140.2 million, or 25 cents, a year earlier. Sales more than doubled to $1.37 billion. The results, released after the markets closed, were in line with estimates.

RIM's shares, however, slipped to $98.61 in late trading after closing at $100.54, up $4.28, on the Nasdaq Stock Market. In Toronto, shares closed at $100.30 (Canadian), up $4.28.

RIM said it shipped more than three million devices during the quarter and added 1.45 million subscribers, bringing the total to 10.5 million. Subscribers are expected to reach 12 million by the end of the current quarter.

The gains come despite mounting threats from competing devices, including the United States launch of Apple Inc.'s much-ballyhooed iPhone in late June, as well as the introduction of other devices from such rival handset makers as Nokia Oyj and Motorola Inc.

Apple, based in Cupertino, Calif., said in September that it had sold one million iPhones in less than three months and that it was slashing prices by one-third to boost Christmas sales.

Balsillie has previously said that the hype around the iPhone was likely to help RIM, not hurt, by raising awareness of the smartphone category in general.

Some observers agree that RIM is reaping the rewards of being the dominant player in a very hot wireless segment.

"They've managed to deliver the right product at the right time," said Iain Grant, managing director of telecom consultancy Seaboard Group. "We are about to see a takeoff of all devices that more closely integrate data with voice, and RIM is a pre-eminent example of that, as is the iPhone."

Expectations have been running high ever since RIM blew past analysts' estimates in the previous quarter, sending the shares soaring more than 20 per cent overnight.

RIM's shares have climbed nearly 70 per cent since the company reported its first-quarter results on June 28.

Balsillie said RIM is continuing to develop new products and services for both corporate users and consumers, and is working on further expansion into key emerging markets, such as China, where users are currently forced to import their devices from other countries.

 


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