Next Quarter a Biggie Says BlackBerry Maker

Research in Motion’s financial report today fell short of analyst expectations with the BlackBerry maker reporting earnings of $495.5 million, representing 86 cents per share, for the fiscal second quarter. Revenue of $2.58 billion marked a 15 percent increase compared to a year ago.

While earnings represented a 72 percent increase from net income of 50 cents per share on $287.7 million, compared to the same quarter last year, analysts expected revenue of $2.6 billion and 87 cents a share on earnings. The disappointment led to a 17 percent share drop, to $80.66, by close of market Thursday.

RIM leaders attributed the lower than expected financials to increased hardware costs tied to upcoming new device platforms, a weak US dollar and increased costs on smartphone components. But co-CEO Jim Balsille was bullish on new products, platforms and market share expectations going forward.

Balsille said RIM is focused on an adoption strategy and he’d like to have more investment on the research and development aspect. For the second quarter, RIM increased R&D investment by nearly 12 percent.

“If we give up ground for short term gratification it’s not in the best interest of our shareholders,” Balsille told investors querying RIM leaders on about product margins and lower than expected financials.

RIM added 2.5 million new subscribers in the quarter, for a total of 19 million. Rim said 42 percent of its subscription base now is non-enterprise users, reflecting Rim’s push this year into the consumer segment.

According to research firm IDC RIM held 54 percent of the smartphone market share as of the second quarter of 2008. The BlackBerry now represents one in every 10 smart phones sold in the United States, according to a recent report released from Strategy Analytics.

Noting this year’s new BlackBerry products, which included the Pearl clamshell handset and the BlackBerry Curve, RIM said several new handsets being readied for launch in the next quarter, as well as new platforms. The vendor said marketing around new products also contributed to lower than expected financials.

“We have never introduced so many products into market so fast,” Balsille. “It’s a remarkable time and we see significant growth ahead.”

RIM forecasts revenues of $2.95 billion to $3.1 billion in the next quarter, with earnings expected between 90 cents and 97 cents per share.

Analyst expectations for the next quarter are earnings of 98 cents per share and $2.94 billion in revenue.

RIM, which shipped 6.1 million units in the second quarter, expects to ship over 7 million units in the next quarter.

We are going to keep and extend our market leadership and be the main interface for data in people’s digital lives,” said Balsille.

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