BlackBerry maker Research In Motion barely beat the Street on November quarter sales, EPS, and device shipments.
But subscriber growth was weaker than expected — a sign of the times as RIM will no longer report subscriber growth in future quarters. (Because it keeps missing its numbers.)
RIM’s guidance looks solid, but as expected, it didn’t offer guidance on subscriber growth.
Shares were initially down 1-2% in after-hours trading but are now up about 1%.
RIM also announced that co-CEOs Jim Balsillie and Mike Lazaridis have been named co-chairmen of the board.
Key stats: (Consensus numbers via Yahoo Finance and Morgan Stanley)
- Nov. qtr. revenue: $5.49 billion vs. $5.40 billion consensus
- Nov. qtr. EPS: $1.74 vs. $1.64 consensus
- Nov. qtr. net sub. adds: 5.1 million vs. 5.2 million consensus
- Nov. qtr. device sales: 14.2 million vs. 14 million consensus
- Nov. qtr. gross margin: 42.1% consensus
- Feb. qtr. revenue guidance: $5.6 billion vs. $5.47 billion consensus
- Feb. qtr. EPS guidance: $1.77 vs. $1.61 consensus
- Feb. qtr. device sales: 14 million consensus
LIVE earnings call blog:
5:00 Waiting for call to begin.
5:02 Call begins. Standard intros and disclaimers.
5:04 Jim Balsillie takes over. Calls his results and outlook strong. Sixth consecutive quarter with record shipments. BB #1 smartphone in UK, LatAm. Included in lots of Black Friday and holiday promotions. Smartphone market is rapidly evolving, growing quickly, highly segmented: Huge growth in prepaid market in UK for example. BB Torch launched in over 75 new markets, weekly sellthru run rates grew q/q. Torch has been a “resounding success” in the Middle East. Currently rolling out in LatAm.
5:06 In US, Torch was launched in red and white, sellthru run rates have increased with these changes. Expecting good visibility in Q4 via New Year’s and Valentine’s Day promos. New phone launched at Sprint, featured in BOGO offer, represents more than 1/3 of Sprint’s BB sellthru. Verizon continues to be a strong partner, one of the most aggressive promoters. Relationship with Verizon remains “strong,” looking forward to releasing “a number” of new products.
5:07 Curve 3G launched, gaining traction, AT&T is promoting in B to B channels.
5:08 China Mobile and RIM recently introduced BIS, now available in Beijing, with rest of markets to follow. Adds BBM and other BB features.
5:09 RIM made lots of announcements at big developer conference in Sept. BB payments service in beta. BB social apps launching early next year. AppWorld apps grew 60%, now more than 16,000 apps available, 2 million downloads daily.
5:10 PlayBook launch Q1 in US, wifi only at first. Cellular to follow (doesn’t specify 3G or 4G.)
5:12 Enterprise customers shared ideas for improving RIM for enterprise at recent event. Importance of security, efficiency, reliability continues to be focus for CIOs. Especially as they let employees use personally-owned smartphones into the enterprise.
5:13 Will make sure the BB PlayBook is enterprise-ready at launch. Offers numerous opportunities to transform businesses. Some customers are delaying plans to deploy “other tablets” to wait for PlayBook launch.
5:15 Looking forward to bringing QNX — the PlayBook platform — deeper into RIM portfolio, it sounds.
5:15 Now going over results from the press release. Channel inventory increased due to timing of shipments in the quarter.
5:16 Diversifying customer base: Top 3 customers represented only 12%, 9%, and 9% of revenue, versus a year ago when top customer represented 25%, with two others representing 13% and 10%.
5:18 RIM repurchased a bunch of stock at average price of $46, is now maxed out on repurchases, can buy another 10% in mid-July 2011.
5:21 No PlayBook revenue in guidance. Expect first PlayBook revenue in RIM’s Q1.
5:21 Expect capex around the same.
5:22 Q&A begins.
5:22 Citi’s Jim Suva asks about marketing SG&A spend. Common to spend 6 months ahead of time for PlayBook? Or something going on with carrier subsidy? Said it would be out in Q1, so not 6 months… just a timing thing. Done this sort of thing with other products. Channel development things going on.
5:24 QNX and BB6 two OSes? Or will they merge? You’re going to see BB6 work on QNX. Talked about BB working on QNX, haven’t given any specific timing or commitments, but obviously there’s a certain set of performance capabilities in the PlayBook. You’ll see more at CES. It’s got really “leapfrogging” capabilities. Will we put in smartphones? Not in the position to make specific commitments right now. Just not making those comments now.
5:25 Having your own platform gives you control, but margins have been declining. At right levels of spend? Where spending R&D? “Turbulence” in the ecosystem. Just about everything you do turns into a packet, and you always want a radio to take it with you. Goal is to be leading service platform. Real differentiation. Pent-up interest in the PlayBook is “really overwhelming.” Whole aspects of carrier billing and value added services, going to see a litany of things happening in that area for both tablet and smartphones. Not a time to be “penny-wise, pound-foolish” when grabbing this space.
5:29 What’s up with ASPs? Mix of handset shift in quarter is big part in ASPs being higher. Torch and success of launches internationally definitely had an impact, Curve 3G, Bold 9780, number of products impacted.
5:31 BB6 rollout good for the mix going forward? Don’t know if it’ll change mix but will be a positive for the company.
5:31 Jeff from BarCap: NorthAm — trajectory of net adds? Can all agree that 2010 wasn’t strongest in NA, what will be better in 2011? Over 48% of sub base was International. NA still performing “very very well.” Different dynamics here than around the world. Gets interesting with 2-3 things happening in 2011: The carriers, we’re very close with the carriers, there’s just “very strong plans” we’re making with them on product roadmap. Also very strong engagement on tablet strat, and very exciting platform strategies. Interesting things with advertising strategies. Higher performance smartphones, tiered smartphones. Will US be harbinger for design around the world? Will US shift? Or will RoW bring indicators to US? It’s hard to know. But it’s a “very turbulent sector.”
5:35 No product lull ahead of QNS. “Great roadmap and a whole series of stuff.” A lot is locked in with launches and “huge desire” for it.
5:36 What’s going on for China? JB: I think you should have very positive expectations for China. Lots of BB there, not through anything we’ve done. Grey market strong. Working with carriers. China does well. You always want them to do better. Grew fast this year, India grew fast, SE Asia “extraordinarily well.”
5:40 Mobile payments? We haven’t disclosed what we’re doing specifically. I mean, you’re not going out on a big limb as to whether or not one’s putting near-field in their product. We’re close to the ISIS group in the US, and payments is a big thing in Europe. Payments getting a lot of attention these days, tug-of-wars. Constructively aligned with carriers, aim to constructively align with banks. Area that’s in flux, but super busy. I don’t think the industry structure is really finalised yet, and I think it’s in the interests of the banks or carriers to finalise, or over-the-top strategies will bypass them. (Long rant, nothing too important.)
5:45 When PB launches, can we expect media strategies? “Oh yeah, oh yeah, oh yeah.” “For sure, for sure.” “Pretty flooded” with content, games, “social solution-type” partnerships. Going to try to be something that’s very professional grade. Something that just really knocks the skin off the ball of what you really expect these things to be. The “no compromise” experience.
5:47 Outsold Apple again, what do you think? How about US? Pleased that business is growing fast, we met and exceeded guidance, see very strong quarter we’re in right now. I think those of you that follow technology, it’s very dangerous to get the Excel spreadsheet out and extend certain trends perpetually. There’s ebbs and tides. Where do you play in long-term architectures? We feel great about architecture. Seeing it come stronger and stronger together. In a different class, and that means something. What does that mean to smartphones? You can dwell on that. Core essence of the business is just moving along so fast. Layer in leapfrog, future-proof architectures, feel very very good about where we are in the US and around the world. Tremendous amount of work you have to do. Do I think we’re in a position to really take where we are and extend it further? In my view, without a doubt. Watch the year unfold, watch 2011 unfold, let the proof be in the deliverables.
5:53 Sellthrough continued into early part of this quarter? If anything, has improved in the early part of this quarter.
5:55 Tablet me-too, playing catch-up in touch interface, Apple and Google going after the home, where else can you take the platform? I think the PlayBook redefines what the tablet should do. I think proprietary SDK and unnecessary apps is going to shift in the market. I think there’s going to be a strong appetite for web fidelity and took familiarity, and rapid desire for high performance, and I think we’re way ahead on that. CIO friendliness, we’re way ahead on that. How do you align or go over the top on carriers or content providers? Different strategies, dynamic market. Enormous growth and shift happening around the world? How many fronts people want to take on contention? (OK, now losing us.) What part of it’s good strategy, what part is a bridge too far? Who knows. I think the PlayBook clearly sets the bar WAY higher on performance. I think with the PlayBook and that environment we’re going to set the new standard. And growing very very fast. So, that’s a lot. Connected home? I think there’s way to seamlessly extend what’s going on in the home, and you’re going to see … going into some pretty serious plays when you’re going into the connected home too hard. What’s the role of the satellite company or cable companies in that? And then how do you insert ads very wel with these content vendors? Lot of moving parts, but I think we’re well ahead on the PlayBook, well ahead internationally, etc.
6:00 And that’s it. We’ll have a transcript of that last one in a few.
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