This summary is based on the first quarter fiscal 2009 earnings call conducted by Research In Motion Ltd. (RIMM) on June 25, 2008.
Management:
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Co-Chief Executive Officer, Director: James L. Balsillie
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President, Co-Chief Executive Officer, Director: Michael Lazaridis
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Chief Accounting Officer: Brian Bidulka
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Vice President, Investor Relations: Edel Ebbs
Key Investors Issues
- Revenues increased 107% to $2.24 billion from $1.08 billion in 2007.
- Net income was $483 million, or 84 cents per share, up 116%.
- Total devices shipped of 5.4 million were up from 4.4 million in the prior quarter.
First Quarter Highlights
Revenues of $2.24 billion, were up 107% from $1.08 billion in the prior year as the firm continues to grow its market presence and now has over 375 carriers around the world offering BlackBerry products and services.
- Handheld devices represented $1.84 billion, or 82% of RIM''s revenue during the quarter, up from 81% of total revenue in the previous quarter.
- Total devices shipped of 5.4 million were up from 4.4 million in the prior quarter and 4.2 million new devices were activated, either for new customers or for replacements and upgrades, not including phone only sales.
- Device ASPs in the quarter were approximately $341, and service revenue was $292 million, or 13% of revenue for the quarter.
- Monthly ARPU declined just slightly from the prior quarter and software revenue was $67 million, or 3% of revenue.
Gross margin was approximately 51%, as operating expenses increased by 22%, on R&D spending of $128 million, or 6% of revenue.
- Net income was $483 million, or 84 cents per share, up 116% from $223.3 million or 32 cents a share in the prior year due to revenue growth.
- RIM''s balance sheet continues to be strong with substantial cash reserves and appropriate working capital balances, generating $504 million in cash from operations before working capital adjustments.
- Capital asset additions, including intangible assets, were $293 million, which was offset in part by cash provided by financing activities of $26 million, primarily related to the issuance of share capital resulting from the exercise of stock options.
Operational Insights:
- Market share continues to grow and according to IDC, U.S. share increased substantially and was more than double that of the nearest competitor, whose share decreased significantly from the prior quarter.
- In May, the firm hosted the Seventh Annual Wireless Enterprise Symposium, which had record attendance of more than 5,000 people, with attendees coming from 90 countries and representing 390 wireless carriers.
- The firm added 2.3 million BlackBerry net swbscriber accounts, which ÷as in line with the April forecast and was 6% higher than the 2.² million net subscriber accounts added in the prior quarter.
Research In Motion continues ôo see strength in North America and thå heavy promotion of the BlackBerry Curve 8330 by the CDMA partners in the latter part of the quarter drove high numbers of net new subscriber account additions and upgrades.
- Growth in new market segments is strong and almost 60% of net subscriber account additions in the quarter came from non-enterprise users, and these customers now represent over 40% of the total base.
Product Portfolio:
- The enterprise business is performing well and there is growing interest in enterprise application enablement, with features such as BlackBerry mobile voice service.
- The new BlackBerry Bold was announced this quarter during the Annual Wireless Enterprise Symposium and received an exceptional response from carriers, from customers, partners, and the media.
- The Bold combines the best features of RIM''s award-winning device portfolio into one smartphone and adds new features, including tri-band HSDPA, enterprise grade WiFi, and GPS, 1-gigabyte of onboard memory.
- The BlackBerry Bold will be available from carriers around the world beginning this summer, with specific launch dates varying by carrier.
The BlackBerry solution was introduced to hundreds of Phones for You stores in Europe for the first time, while continuing to perform well with existing channels, including 20-20, Carphone Warehouse, and Ingram Micro.
- In Canada, TELUS introduced Pink Pearl into Canadian Wal-Mart stores for the first time and promoted it with in-store signage and device giveaways.
- The firm also entered into a global agreement with Bright Point to distribute BlackBerry products and service.
- Bright Point’s 25,000 B2B channels will help extend RIM’s market reach into multiple new territories and many carriers are already taking advantage of the expanded capabilities that Bright Point can offer in the enterprise and consumer space.
- Tiered pricing plans with carrier partners continue to drive end market success, with the introduction of several prepaid plans in Europe, Asia, and Australia.
In Indonesia, Telkomsel announced the availability of a prepaid biz plan where subscribers can easily refill their service by SMS, which has led to a four-fold increase in weekly activations, albeit off a smaller base.
- TIM continues to be a leader of innovative price plans, where they introduced a one-Euro per day prepaid plan, and Orange U.K. recently introduced an unlimited biz plan for 7.5 pounds.
- In Asia-Pacific, the firm successfully launched additional carriers in both Australia and New Zealand while existing carriers in the region have also seen good traction from different pricing promotions and new product introductions.
- In India, Bharti Airtel continued its momentum from last quarter with innovative enterprise pricing plans and attractive device offerings.
The industry-leading integration with CRM platforms further evolved quarter with the announcement of the SAP CRM module for BlackBerry enterprise server, which allows SAP to run as a native application on BlackBerry devices.
