Research In Motion Limited (Nasdaq: RIMM, stock), the maker of BlackBerry smartphones, reported second-quarter results on Thursday that topped forecasts, immediately sending the stock price as much as 6.5% higher during after-hours trading. The stronger than expected profit, shipments and revenue came as a surprise for investors who have more or less concluded the BlackBerry was set to continue losing market shares hence earnings.
R.I.M also said it added 2 cents a share to the earnings via $1.5 billion in stock buy-back in the quarter. Below is the summary of the earnings for the quarter ended Aug 28:
- Earned $796.7 million on revenue of $4.62 billion versus analysts forecast of $4.47 billion. The company earned $475.6 million, or 83 cents, in the same period last year.
- Earned $1.46 a share against analysts forecast of $1.35 a share
- Had shipped 12.1 million units compared to analysts projection of 11.8 million units
- Gross profit margin was 44.5% versus expectations of 43.9%
- Expect to add 5.0 million to 5.4 million subscribers against analysts forecast of 5.2 million subscribers
- Gave upside guidance – forecast earnings per share (eps) of between $1.62 – $1.70 on revenue of $5.3 billion to $5.55 billion, versus Wall Street estimate of eps of $1.39 and revenue of $4.8 billion.
- Expect to ship between 13.8 million and 14.4 million units in the third quarter – ahead of the 12.5 million expected by 16 analysts in a Reuters poll
- R.I.M also said it added 2 cents a share to the earnings via $1.5 billion in stock buy-back in the quarter.
RIM co-CEO Mr. Balsillie said subscriber growth initially was hurt by competing products entering the market during the summer and by weakness in Middle East markets due to concerns local service could be interrupted due to disputes with governments over security issues. However Balsillie said RIM remains in discussions with India and the United Arab Emirates to resolve concerns about their inability to monitor encrypted communication over BlackBerrys and is optimistic about a positive resolution.
With this latest earnings data, the company has send a message to critics who believe Apple Inc.’s (Nasdaq: AAPL, stock) iPhone and Google Inc.’s (Nasdaq: GOOG, stock) Android are slowly killing BlackBerrys is not true, at least not at the moment. Nevertheless with more and more research reports being bias against RIM’s market share it’s not easy for the stock to withstand the onslaught.
Investors may now realize that the stock may have been oversold previously and it’s time to reconsider buying the stock. Furthermore, the company was trading at freaking low P.E. (price per earnings) of only 7.7 times before the earnings announcement. With zero debts it would be real stupid to ignore this stock again. If that is not enough, consider the fact that the BlackBerry Torch, which has a touch-screen and slide-out keypad, was launched just 2-weeks before the quarter ended Aug 28 so the real number of Torch is still unknown.
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