- In Asia-Pacific, the company launched additional carriers in both Australia and New Zealand. 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.

- At WEZ in May, the company announced a significant partnership with IBM which will enable IBM to offer a broad range of services for BlackBerry, including hosting, consulting, systems integration, and deployment of enterprise applications on the BlackBerry platform.
In addition, BAS customers will have access to a full line of IBM’s web 2.0 powered Lotus collaboration solutions, which enable personalization of portals and dashboards, corporate social networking, unified communication, and access to IBM’s Lotus Same-time and Lotus Connections.

- Native versions of both the Washington Post and the USA Today mobile applications were launched and a new e-trade mobile product for BlackBerry smartphones was also announced.
In May, Bell launched BlackBerry Unite in Canada and the initial feedback has been positive. Carriers and end users are continuing to embrace WiFi enabled BlackBerry devices. T-Mobile launched both the 8820 and the Pearl 8120 this quarter.
- Rogers launched the 8120 with WiFi and paired it with their UMA based Rogers home calling zone. This is the first UMA based service to be offered in Canada and will allow subscribers to manage their phones costs by combining home and cellular services in one device for $20 a month for calls within Canada, and as low as $15 per month for local calls.
- AT&T launched the 8120 with WiFi in their B2B channels, targeted at corporate users who have wireless access within a campus environment, as well as offering support for global WiFi hot-spots.

Second Quarter 2009 Outlook

- The company is forecasting revenue to be in the range of $2.55 billion to $2.65 billion.
- The company expects hardware shipments to be over 6 million units and an ASP of around $349. The expected increase in volume of shipments is primarily due to continued strong sell-through of existing BlackBerry products, such as the CDMA Curve and WiFi enabled devices with North American carriers, as well as some stocking for back-to-school promotions scheduled for August.

- While there will be some new products included in the mix, the company expects shipments of BlackBerry Bold and other new products to really start ramping in the third quarter. The company anticipates that weeks of channel inventory at the end of the second quarter will only be up on a forward-weeks basis but are well within the range the company is comfortable with.
- Software revenue is expected to increase.
- The company is targeting net subscriber account additions of approximately 2.6 million.

- The company expects gross margin to be lower at approximately 50.5%. The weak U.S. dollar is expected to put some near-term pressure on gross margins. Many of component suppliers and outsourcing partners have costs in currencies that are strong relative to the U.S. dollar, such as the Euro or Yen, and some of these increased costs are beginning to be passed along in the form of higher pricing to customers like RIM.
- The company expects a total operating expense increase of approximately 26% to 28% from the first quarter levels, with R&D increasing by approximately 23% to 24%, and sales and marketing and administration expense increasing by approximately 28% to 30%.


- The company expects depreciation and amortization to be between $44 million and $45 million, higher than the first quarter due to ongoing CapEx.
- The company expects CapEx to be approximately $250 million in each of the second quarter and the third quarter.
- In addition to the CapEx forecasted for the second quarter, a patent acquisition of approximately $200 million was completed subsequent to first quarter end and is incremental to the $250 million CapEx forecast for the second quarter.

- Investment income is expected to be approximately $16 million. The company expects the tax rate to be approximately 29% to 30% and to remain at this level throughout fiscal 2009. Beyond fiscal 2009, the company expects to see the rate decrease further due to scheduled Canadian corporate income tax deductions.
- The company expects EPS to be in the range of 84 cents per share to 89 cents per share.

Key questions from the first quarter earnings call conducted by Research In Motion Limited on June 25, 2008.

Jim Suva (Citigroup): You guided this quarter for SG&A to grow like 17% to 18% and it came in around 22% or $10 million more. Can you give color on the SG&A and the investments you are making in the future?

Edel Ebbs: We have a lot of stuff happening in the third quarter. We have product launches. We have a lot of carriers lining up some great programs and we thought this is the right time to start investing. We started a branding campaign in the first quarter and you may have seen some of the ads on TV as well. There are two parts to it. There are brand building activities that we are doing and then there is more demand generation type activities that we are doing, and it is all designed to take advantage of all the stuff that we have happening in the third quarter.

Jim Suva (Citigroup): Does the big increase for next quarter level out after that or do you continue to see it upward?

Edel Ebbs: You are going to continue to see it grow, as long as the programs are providing the return on them that we expect to get. What it comes down to is what we are going to do on the top line.

James L. Balsillie: It is a surge of capacity building and branding and demand and other programs ahead of what is a flurry in the back half of this year. We are delighted with the top line growth in the second quarter which is normally not the busiest time. What is lined up for the back half of this fiscal year, especially the whole holiday season, is by far unprecedented for RIM. A lot of execution pressures but we have a lot of brand and marketing and channel and program investments due ahead of that, so it is investing to drive the top line, shifting more out of the traditional R&D side of it and there are a bunch of other execution things.

Maynard Um (UBS Securities): Your top line guidance implies strong fundamentals and the visibility and lead times for hardware builds there give you good confidence in that range. On the operating leverage side, you are building for something much larger in the back half of the year. Do you anticipate that you need to continue to spend at this high clip going into the back half In terms of the leverage in the model?

James L. Balsillie: There are many changes at hand because you are always investing into such a strong growth amount, so in a sense the investment becomes a constant. Even though we are performing well currently financially, you still are investing. It is important to remember we had 107% growth year over year, and we are still growing strong and we expect strong growth. So there is a constant in investing into growth where the amount seems a lot today but it turns something so positive tomorrow that it is small by comparison. As well, there are a number of positive things we see can be done with the model and it is a question of timing and degree versus just purely driving top line. Right now, it is an adoption acceleration game and a channel with a flurry of products and a strong channel adoption and new carrier launches and ecosystem enabling of new apps, and just a model that is so powerfully positive for carriers. That aspect focuses us right now and the top line is important because as long as we keep that growth going, good things fall out and if you stop investing for growth, you bet the model just torques right back. You have to invest certain periods of time to manifest that growth, whether it is a quarter later or two quarters later or a year later, so the model is positive but you are also investing into hyper-growth and sometimes they are currently expensed items that just distort the model.

Mike Abramsky (RBC Capital Markets): What do you see the company looking like after this period of investment for the next level?

James L. Balsillie: This is a newsy space. A day does not go by when something strategic and interesting is not happening and this week has been no exception. We are only three days through this week and we see positive structural things happening in our market, and ones that are worthy of considerable reflection. We see many aspects of the business shifting. You have seen some interesting capabilities on the B2C and the cooperation that is coming out of there. Some of the big enterprise people like SAP, the carrier and the channel, much more powerful applications going on, deeper, deeper sort of sectoral expansion. We slid in a sleeper today, which was the Australia Cisco Vodafone one, which is a pilot for global rollout with Cisco and other carriers, where the carrier becomes a turnkey SMB IT play, which has been sort of a market that has always been hard to bring about and it is using the Cisco box, which has different names or different countries, and an MVS and there are exciting opportunities to roll in Unite and you just have this turnkey box there. There are many exciting levers at play and enablers that get the players who have strong positions in this space very excited. It becomes a question of timing and degree for us, but it all becomes moot if we do not keep torquing adoption. As long as you feed adoption, as long as you have a strong carrier profit model, many other things are there and are going to happen. We like where we sit and you see lots of dynamics in the market ignoring us or countering us or leapfrogging or seeking to or something like that. We are in a special position and if you reflect on the totality of what is going on, you come to the conclusion that all roads lead to adoption right now and then definitely sort of streaming and enhancing and evolving later in ways that properly serve customers and carriers in the ecosystem.