RIM numbers may not add up: analysts

Research In Motion says it'll have fewer subscribers but revenue should be in line with estimates? Analysts are scratching their heads.

On Wednesday, RIM lowered its forecast for new subscribers for the third time this year. Third-quarter numbers have been cut back by 8 percent for the rest of the year. The company blamed the revision on two new BlackBerry models that failed to ship on time.

With expected revenue in the range of $540 to $570 million, how will the BlackBerry maker make up the difference?

"Honestly, I do not see them meeting their objectives without adding subscribers and releasing these products on time," said Brad Akyuz, a senior analyst with research group Current Analysis. "The 7100 from Cingular is nearly a year old and people have been looking for the 8700 with Intel inside, so RIM needs those devices."

However, the 7100 series comprised 20 percent of RIM total shipments, according to Gartner analyst Todd Kort's assessments. At last check, Kort said RIM shipped 188,000 of its 7100t (as in supported by T-Mobile) in its fiscal second quarter. Compare that to the more than 862,000 traditional PDA-style units that RIM claims it shipped in the same time period and the shipping slip up will hurt RIM but not kill Q3, Kort said.

Kort's take on RIM's upcoming Q3 report: RIM can make it up in server revenue.

"They do have a substantial server business and just released BlackBerry Enterprise Server version 4.1, so they could make their revenues up in that area," Kort said.

RIM's other financial secret may lie in its ability to lock in customers to its servers, Kort added, because the latest version allows them to consolidate hardware.

"That will in effect lock in their customers even more because it should lower the cost of ownership of a BlackBerry system." Kort said.

RIM has been promoting itself to ship close to 4 million handheld devices by the end of the year but their subscriber number could hit 4.3 million by the end of the year.

The only other area where RIM might be able to save face in the financial community would be through its BlackBerry Connect software licensing, which makes up about 30 percent of its overall business, according to RIM.

"Going forward, you might see an increase in the software part of the business, but that won't happen in one quarter," Akyuz said.

Lay-offs are not out of the question but unlikely given reports that RIM is hiring about 50 people a week to help support non-U.S. ambitions.

The other potential stumbling block could be an injunction forcing RIM to stop shipping product to U.S. customers until it repairs relations with Virginia-based NTP. A federal judge is expected to issue his opinion this week.

"There is concern by some clients but we've told them to proceed as usual and not panic," Kort said. "We tell them it is prudent to consider the alternatives, but the other ones out there are not that good right now."

 

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