RIM revenue trails estimates as iPhone gains users

Research In Motion Ltd., maker of the BlackBerry smartphone, reported sales that trailed analysts' estimates after its latest models failed to keep consumers from snapping up Apple Inc.'s iPhone. The stock fell.

First-quarter sales rose 24 percent to $4.24 billion, RIM said today in a statement. Analysts had predicted $4.35 billion, the average of estimates compiled by Bloomberg.

RIM, best known for handsets equipped with a full keyboard, has struggled to create a touch-screen device that can compete with Apple's iPhone or Motorola Inc.'s Droid as consumers increasingly use phones to watch video and surf the Web. RIM's BlackBerry shipments lagged behind analysts' estimates and the company projected shrinking margins for this quarter.

"They needed to blow out expectations on the quarter or at least on the guidance to suggest that they're turning the corner, and they didn't," Nick Agostino, an analyst at Mackie Research Capital in Toronto, said in a telephone interview. "Apple has taken it to RIM both in market share and also in terms of grabbing the positive headlines."

RIM dropped as much as $3.33, or 5.7 percent, to $55.25 in late trading after the results were announced. The stock has declined 13 percent this year on the Nasdaq Stock Market. RIM said today it plans to buy back as many as 31 million shares.

The Waterloo, Ontario-based company shipped 11.2 million phones last quarter, falling short of the 11.4 million average of four analysts' estimates compiled by Bloomberg.

Two Debuts

The average selling price of BlackBerrys to carriers was about $300, "slightly lower than expected" because of product mix and delays in shipments of pricier new phones, Chief Financial Officer Brian Bidulka said in a conference call with analysts.

RIM plans to introduce two devices around the end of the current quarter and beginning of the next, co-Chief Executive Officer Jim Balsillie said on the call. The devices will have higher average selling prices and should have a "meaningful" effect on revenue and earnings forecasts, he said.

One may be a touch-screen BlackBerry with a Qwerty keyboard that slides out vertically, according to Web blogs and analysts including Mike Abramsky at RBC Capital Markets in Toronto.

RIM's OS 6 operating system will be available before the end of September, Balsillie said. The company did not say whether the two new devices will incorporate OS 6.

"You guys have to watch and see what the plans are," Balsillie said. "I wish I could wind the clock forward a few weeks."

Shrinking Market Share

The company's share of the smartphone market fell to 19.4 percent of global shipments last quarter from 20.9 percent a year ago, according to researcher IDC, based in Framingham, Massachusetts. Apple, whose latest iPhone started selling today, claimed 16.1 percent of the smartphone market, up from 10.9 percent a year ago.

Sales this quarter will be $4.4 billion to $4.6 billion and earnings per share will be $1.33 to $1.40, RIM said. Analysts projected revenue of $4.51 billion and profit of $1.31 a share.

Gross margin, the percentage of sales left after production costs, will narrow to 44 percent this quarter from 45.4 percent last quarter, RIM said.

First-quarter net income rose 20 percent to $768.9 million, or $1.38 a share, from $643 million, or $1.12, a year earlier.

"It will probably take several quarters of financial results and product launches to address concerns over RIM's future," said Abramsky, who has a "top pick" rating on the stock.