RIM to Announce Earnings June 18, Analysts Positive

On June 18, BlackBerry maker Research In Motion will announce the results of its first fiscal quarter of 2010, which ended May 30.

Broadpoint AmTech analyst Mark McKechnie wrote to investors in a June 12 report that he expects a “solid result and outlook.”

McKechnie added, “We are encouraged by early signs that non-iPhone carriers will respond with increased promotions of BlackBerry devices.” Based on guidance from RIM management, he is expecting a revenue announcement between $3.4 billion and $3.5 billion, and subscriber growth of 3.7 million to 3.9 million.

RIM’s previous quarter, which ended Feb. 28, was a particularly strong one, with profits of $3.46 billion.
“RIM experienced an extraordinary year in fiscal 2009, shipping our 50-millionth BlackBerry smartphone and generating $11 billion in revenue,” Jim Balsillie, RIM’s co-CEO, announced in an April 4 statement.

Also in April, Strategy Analytics’ analyst Neil Mawston told eWEEK that “RIM does a better job than most of managing its production costs” and that in the long term, “R&D spending may have to go up as RIM’s portfolio expands, while its average handset price will inevitably come down as it pushes toward the mid-range mass market.”

This summer RIM will indeed expand its portfolio with the BlackBerry Tour, a CDMA “world phone” it announced June 16. Sprint will offer for the Tour for $199 with a two-year contract, according to Bloomberg. Verizon will also offer the Tour, and in Canada it will be available through Telus and Bell.

McKechnie has a “buy” rating on RIM stock and expects good things from the Tour. In a June 16 statement to investors he wrote:

“We expect solid margins at launch for the Tour as 1) it is based on the same platform as the Storm, 2) it does not have a touch-screen, which we believe was part of the margin issue, and 3) RIM is further down the learning curve with its new EMS partners. We think low 30 percent margins at launch are possible.”

McKechnie expects 400,000 to 600,000 BlackBerry Tour handsets to sell in the August quarter, noting that the BlackBerry Storm launched just before Thanksgiving 2008 and “sold 1 million units at Verizon by the end of January with fairly weak margins.”

McKechnie writes that he also expects a refresh of the BlackBerry Bold and Storm, likely in the fall, and a mid-range Curve device.

“August will benefit from the Curve 8900 at AT&T. We believe this will be a very popular product and sales will be helped by the recent price drop to $149 after launching at $199,” wrote McKechnie.

“We also think the Bold will see better sales after its recent price drop to $199, after having been at $299 since launch. We think the new 3G Pearl Flip at Verizon will be helpful at the margin, but not a major driver for sales at [Verizon].”

Several major smartphone offerings have newly arrived or will join the fray soon, and the Tour will find competition in the Apple iPhone 3G S, which arrives June 19, as well as in the Palm Pre and the Nokia N97.