RIM hammered on forecast for current quarter
Investors in BlackBerry maker were not satisfied with huge increases in revenue and earnings per share, punishing RIM for giving a slightly weaker-than-expected outlook.
Updated 3:15pm PT with comments from conference call.
Doubling revenue and earnings per share wasn't good enough for Research in Motion's investors, who punished the company Wednesday after its outlook fell short of expectations.
RIM recorded first-quarter revenue of $2.24 billion, up 107 percent from last year's first fiscal quarter. Earnings per share were 84 cents per share on net income of $482.5 million, compared to last year's first quarter, when earnings per share were 39 cents per share. Both of those numbers were within guidelines set by the company last quarter but slightly off of what analysts polled by Thomson One were expecting: $2.27 billion in revenue and earnings per share of 85 cents.
The real ire, however, came as the result of RIM's outlook for the next quarter. The company said it expects revenue between $2.55 billion and $2.66 billion as well as earnings per share between 84 cents and 89 cents for its second fiscal quarter. But analysts had been expecting earnings per share of 90 cents, and investors hammered RIM's stock in after-hours trading, sending it down more than 9 percent. Before the earnings announcement, shares of RIM rose $1.87, or about 1 percent, to close at $142.35 Wednesday.
RIM added 2.3 million new BlackBerry subscribers during the quarter, and shipped 5.4 million devices, it said. The company is expected to hold a conference call later today to discuss its quarter, and I'll update this post if anything interesting comes out about RIM's performance and its outlook for the rest of the year.
UPDATED 3:15pm - RIM co-CEO Jim Balsillie and Adele Ebbs, vice president of investor relations, told analysts that the company plans to spend more money in the upcoming quarter on marketing initiatives, among other things, designed to lift RIM's profile with consumers. If you've been watching television lately--especially the NBA Finals--you've seen dozens of BlackBerry ads, and with thelater this summer, expect to see more.
Balsillie also professed to be unconcerned about the, pointing out several times that in recent quarters. When pressed by a financial analyst on whether he sees an overlap with Apple's customer base, Balsillie emphatically said "Nah, nah," and you could almost hear him shaking his head over the conference call bridge.
Perhaps the unanswered question is if RIM isn't concerned about the iPhone, why does it feel the need to boost advertising spending at this particular point in time? Balsillie briefly touched on that notion, which he sees as "a bit of a land grab game right now." This town may very well be big enough for both RIM and Apple as the overall market grows; "all roads lead to adoption right now," he said.