Research In Motion Limited (RIMM)
Q2 2011 Earnings Call Transcript
September 16, 2010 5:00 p.m. ET

Executives

Edel Ebbs – Vice President, Investor Relations
James L. Balsillie – Co-Chief Executive Officer
Brian Bidulka – Chief Financial Officer

Analysts

Michael Abramsky – RBC Capital Markets
Kulbinder Garcha – Credit Suisse
Jeffrey Kvaal – Barclays Capital
Maynard Um – UBS
Gus Papageorgiou – Scotia Capital

Presentation

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Research In Motion Second Quarter Fiscal 2011 Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session with instructions provided. If any one has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this conference is being recorded today, Thursday, September 16, 2010, at 5 p.m. Eastern time. And I will now turn the conference over to Edel Ebbs, Vice President, Investor Relations. Please go ahead.

Edel Ebbs

Thank you. Welcome to RIM''s fiscal ‘11 second quarter results conference call. With me on the call today are Jim Balsillie, co-CEO, and Brian Bidulka, CFO. After I read the required cautionary note regarding forward-looking statements, Jim will provide a business and strategic update, Brian will then review the second quarter results and I''ll discuss our outlook for the third quarter of fiscal 2011. We''ll then open the call up for questions.

I''d like to note that this call is available to the general public via call-in number or webcast. A replay of the webcast will also be available on the rim.com website. We plan to wrap up the call before 6 p.m. Eastern this evening.

Some of the statements we''ll be making today constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. These include statements about our expectations and estimates with respect to product shipments, revenue, gross margin, operating expenses, CapEx, depreciation and amortization, earnings, channel inventory, seasonality and ASPs for Q3 fiscal 2011 and beyond.

Our expectations regarding RIM''s near and long-term tax rates, our expectations regarding the impact of foreign exchange of our revenue and net income in Q3, our estimates of the number of net subscriber account additions and other non-financial metrics, our product development and marketing initiatives and timing; developments relating to our carrier partners and other statements regarding our plans and objectives.

We will indicate forward-looking statements by using words such as expect, plan, anticipate, estimate, may, will, should, forecast, intends, believe, continue and similar expressions. All forward-looking statements reflect our current views with respect to future events and are subject to risks and uncertainties and assumptions we have made.

Any factors could cause our actual results, performance or achievements to be materially different than those expressed or implied by our forward-looking statements, including risks relating to our intellectual property rights; our ability to enhance our current products and develop new products and services; risks related to competition; our reliance on carrier partners, third-party manufactures, third-party network developers and suppliers; risks relating to network disruptions and other business interruptions; our ability to manage our production facilities; security risks and risks relating to encryption technology; risks associated with our international operations; our ability to manage growth and other factors set forth in the risk factors and MD&A sections in RIM''s filings with the SEC and Canadian Securities regulators. We base our forward-looking statements on information currently available to us and we do not assume any obligation to update them except as required by law.

I''ll now turn the call over to Jim.

James L. Balsillie

Thank you, Edel. We are pleased to report strong financial results for the second quarter of fiscal 2011, with shipments, revenues and earnings all above the high end of the ranges we guided on the last conference call. Revenue grew 31% over the same quarter last year and GAAP earnings grew 76%.

The BlackBerry subscriber account base grew 56% year over year to over $50 million and RIM has shipped approximately 115 million handhelds to date. This strong performance was due to the well-executed launch of two new products during the quarter, excellent performance in international markets, particularly Latin America and Asia.

BlackBerry smartphones are available through over 565 carrier and distribution partners in approximately 175 countries and international markets continue to be a strong driver of growth. Approximately 52% of revenue in the quarter was generated outside the United States and over 45% of BlackBerry subscriber account base is outside of North America.