We already know that BlackBerry maker Research In Motion (RIMM) had a good quarter: In late February, the company jacked its subscriber guidance by up to 20%. The question is whether the subscriber upside extended to revenue and earnings, which it should have. If it didn’t, look out below.
Specifically, for the stock to go up from here, RIMM needs to handily beat revenue and EPS estimates AND significantly raise guidance (see below).
What will we be looking out for when RIM posts Q4 results this afternoon?
First, did increased subscribers really generate higher sales and profits? When RIM increased its subscriber guidance 15%-20% in February, it didn’t touch revenue or EPS guidance. So is RIM just setting the table for a blowout? Or are subscriber acquisition costs and lower-priced BlackBerry Pearl sales reducing the company’s per-unit top and bottom lines?
And second, how’s the mix between enterprise and “pro-sumer” sales going? Last quarter, 34% of RIM’s subscribers were “non-enterprise,” up from 30% the quarter before. The consumer smartphone market is growing fast — good news for RIM — but, especially in a recession, non-enterprise customers are more likely to buy cheaper phones (like the Pearl) and aren’t as tied down to BlackBerry back-end systems as business customers are.
Here’s what analysts are expecting:
- Revenue: $1.85 billion (vs. $1.80 billiion to $1.87 billion guidance). Expect significant upside here.
- EPS: 70 cents (vs. 66 cents to 70 cents guidance, 76 cents whisper number)
- Subscriber net additions: Anything above 2.5 million is “very bullish,” according to AmTech (vs. 2.1 million to 2.2 million guidance)
- Guidance: Current consensus for FQ1 is $2.01 billion of revenue and $0.75 of EPS. These estimates likely need to go up at least 5%-10% to avoid a stock drop.
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