Research in Motion (RIMM) had a strong quarter despite financial sector exposure and weak consumer and enterprise spending. First three weeks of December have also been very strong. Guidance is probably conservative, but management hedging on this because consumer market now 34% of the business and management has less experience predicting this segment. Estimates going up.
Management acknowledges some impact in financial services sector from credit crunch, but clearly not debilitating. Much of growth is coming from outside North America.
Our financial model (below) contains pre-quarter consensus estimates for all key metrics (blue shaded section) versus actual results (column to the right of blue shading).
Unexpectedly strong growth in the consumer segment. For the first time, more than half of net subscriber additions came from consumers. Consumer sales accounted for 34% of revenue, up from 31% last quarter. Robust growth in this segment may explain a strong Black Friday and holiday sales period (usually a weak period for RIMM).
No evidence of impact from weakening enterprise spending.
Changing customer mix may make revenue and earnings growth more difficult to predict in the immediate future.
Management believes that handset prices will rise significantly, up from an average of $342 to $350 in the next quarter.
The odd news: The ratio of phone sales to subscriber additions increased even more than usual. Management offered one possible explanation: Some of their sexier phones (i.e. the Curve, the Pearl) are being bought to use as phones instead of phones-and-email.
SAI Spreadsheet: RIM Financial Analysis
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