RIM posts Q2 results, tops 10 million subscribers

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MoneymanRIM’s results this quarter were as impressive as ever, reporting a 27% climb in revenues to $1.37 billion, the bulk of which is from device sales. Income alone was $287.7 million, up from $223.2 million last quarter. The world saw 1.45 million more BlackBerry accounts activated, putting the grand total at a little over 10 million users. The market reacted favourably to the announcement, with heavy stock trading happing last night and closing at $103.00. Sales from new devices released this quarter haven’t had much of a chance to ramp up just yet, so we can count on some overflow there for Q3. So much for the iPhone, huh?

October 4, 2007
Research In Motion Reports Second Quarter Results

Waterloo, ON – Research In Motion Limited (RIM) (Nasdaq: RIMM; TSX: RIM), a world leader in the mobile communications market, today reported second quarter results for the three months ended September 1, 2007 (all figures in U.S. dollars and U.S. GAAP).

Revenue for the second quarter of fiscal 2008 was $1.37 billion, up 27% from $1.08 billion in the previous quarter and up 108% from $658.5 million in the same quarter of last year. The revenue breakdown for the quarter was approximately 78% for devices, 15% for service, 4% for software and 3% for other revenue. Approximately 1.45 million BlackBerry® subscriber accounts were added in the quarter and over 3 million devices were shipped. The total BlackBerry subscriber account base at the end of the second quarter was approximately 10.5 million.

“RIM’s second quarter results were exceptionally strong on all metrics including revenue, subscriber account additions and net income,” said Jim Balsillie, Co-CEO at RIM. “This growth is fueled by the depth of the BlackBerry product portfolio and the continued diversification of our business across market segments and geographies. With over ten million BlackBerry subscriber accounts and over twenty million handsets shipped, we are pleased with our position in the market today and we expect recent product and market initiatives to extend our business momentum through the remainder of the fiscal year.”

Income for the quarter was $287.7 million, or $0.50 per share diluted, compared with net income of $223.2 million, or $0.39 per share diluted, in the prior quarter and net income of $140.2 million, or $0.25 per share diluted, in the same quarter last year. Please note that the earnings per share reflect the effective 3-for-1 stock split that was implemented in the quarter.

Revenue for the third quarter of fiscal 2008 ending December 1, 2007 is expected to be in the range of $1.60-1.67 billion. Subscriber account additions in the third quarter are expected to be approximately 1.65 million. Earnings per share for the third quarter are expected to be in the range of $0.59-0.63 per share diluted.

The total of cash, cash equivalents, short-term and long-term investments was $1.73 billion as at September 1, 2007, compared to $1.56 billion at the end of the previous quarter, an increase of $166 million over the prior quarter. Uses of cash in the quarter included capital expenditures of approximately $79 million.

Highlights of the Second Quarter Include:

• Sprint and Alltel launched the BlackBerry 8830 World Edition in the U.S.
• Bell Mobility and TELUS launched the BlackBerry 8830 World Edition in Canada.
• Telefónica launched the BlackBerry Curve in Argentina, Brazil, Ecuador and Chile as well as the BlackBerry Pearl in Mexico.
• Telcel launched the BlackBerry Curve and the red BlackBerry Pearl in Mexico.
• TIM launched the BlackBerry 8800 in Brazil.
• Entel PCS launched the BlackBerry 8800 and the BlackBerry Curve in Chile.
• The Carphone Warehouse launched the BlackBerry Pearl, the BlackBerry Curve and the BlackBerry 8800 in the UK.
• Vodafone launched the BlackBerry Curve 8310 in the UK, Germany, Portugal, Croatia, Slovenia and The Netherlands.
• O2 launched the BlackBerry Curve in the UK and Ireland.
• Orange launched the BlackBerry 8820 in the UK, Switzerland, Belgium, Poland, Romania, Slovakia and Spain.
• SFR launched the BlackBerry 8820 and the BlackBerry Curve 8310 in France.
• mobilkom launched the BlackBerry Curve 8310 in Austria.
• Swisscom launched the BlackBerry Curve 8310 in Switzerland.
• TIM Italy launched the BlackBerry Curve and the red BlackBerry Pearl in Italy.
• TMN launched the BlackBerry Curve in Portugal.
• Vodafone launched the BlackBerry Pearl and the BlackBerry 8800 in Turkey.
• Avea launched the BlackBerry Curve and the BlackBerry 8820 in Turkey.
• Turkcell launched the BlackBerry Curve in Turkey.
• Vodafone launched the BlackBerry Pearl in Egypt.
• DoCoMo launched Japanese text input support for the BlackBerry 8707h and BlackBerry Enterprise Server.
• 3Hong Kong launched the BlackBerry Curve, the BlackBerry 8820 and the red BlackBerry Pearl in Hong Kong.
• SmarTone-Vodafone launched the BlackBerry Curve 8310, the BlackBerry 8820 and the red BlackBerry Pearl in Hong Kong.
• Peoples, PCCW and CSL launched the BlackBerry Curve in Hong Kong.
• Bharti launched the BlackBerry Curve and the BlackBerry 8820 in India.
• Vodafone Essar launched the BlackBerry Curve 8310 and the BlackBerry 8820 in India.
• Optus launched the BlackBerry Curve in Australia.
• Vodafone launched the BlackBerry Curve 8310 in Australia.
• M1 launched the BlackBerry Curve in Singapore.
• SingTel and StarHub launched the BlackBerry Curve and the BlackBerry 8820 in Singapore.
• BlackBerry ISV Alliance members continued to build upon the BlackBerry platform with a range of new products and services that help customers extend their wireless data strategies beyond wireless email.
• BlackBerry smartphones are now available around the world from over 300 carriers.

Highlights Subsequent to Quarter End Include:

• The BlackBerry Enterprise Solution achieved Common Criteria Certification.
• RIM introduced the BlackBerry Pearl 8130.
• RIM and Telefónica introduced the BlackBerry Pearl 8120 and BlackBerry Unite! software.
• AT&T launched the BlackBerry 8820 in the U.S.
• T-Mobile launched three new BlackBerry Pearl colors and the BlackBerry Curve 8320 in the U.S.
• Rogers launched the BlackBerry Curve 8310 in Canada.
• TIM Brazil announced the BlackBerry 8310 in Brazil.
• Proximus launched the BlackBerry Curve 8310 and the BlackBerry Pearl in Belgium.
• BASE launched the BlackBerry Curve in Belgium.
• Vodafone launched the BlackBerry Curve 8310 in Italy and Spain.
• O2 launched the BlackBerry Curve in Germany.
• MTS and Alcatel-Lucent launched the BlackBerry solution in the Ukraine.
• Vodacom launched the BlackBerry Curve 8310 in South Africa.
• Reliance Communications launched the BlackBerry 8830 World Edition, the BlackBerry 8703e, the BlackBerry Curve and the BlackBerry Pearl in India.
• BPL launched the BlackBerry Curve in Mumbai, India.
• Vodafone launched the BlackBerry Curve 8310 in New Zealand.

The replay of the company’s Q2 conference call can be accessed after 7 p.m. (eastern), October 4, 2007 until midnight (eastern), October 18, 2007. It can be accessed by dialing 416-640-1917 and entering passcode 21221688#. The conference will also appear on the RIM web site, live at 5:00 pm (eastern) and archived at http://www.rim.com/investors/events/index.shtml until midnight November 8, 2007.

About Research In Motion (RIM)
Research In Motion is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to time-sensitive information including email, phone, SMS messaging, Internet and intranet-based applications. RIM technology also enables a broad array of third party developers and manufacturers to enhance their products and services with wireless connectivity. RIM’s portfolio of award-winning products, services and embedded technologies are used by thousands of organizations around the world and include the BlackBerry® wireless platform, the RIM Wireless Handheld™ product line, software development tools, radio-modems and software/hardware licensing agreements. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in North America, Europe and Asia Pacific. RIM is listed on the Nasdaq Stock Market (Nasdaq: RIMM) and the Toronto Stock Exchange (TSX: RIM). For more information, visit www.rim.com or www.blackberry.com.

This news release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities laws, including statements relating to RIM’s revenue and earnings expectations for the third quarter of fiscal 2008, anticipated growth in subscribers, anticipated growth during the fiscal year and plans relating to RIM and its carrier partners. The terms and phrases, “expected”, “growth is fueled”, “continued diversification”, “momentum” and similar terms and phrases are intended to identify these forward-looking statements. Forward-looking statements are based on estimates and assumptions made by RIM in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that RIM believes are appropriate in the circumstances. Many factors could cause RIM’s actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, risks relating to RIM’s review of its historical option granting practices, the restatement of its previously filed financial statements as a result of the review, and regulatory investigations and litigation relating to these matters; the efficient and uninterrupted operation of RIM’s network operations center; risks relating to RIM’s intellectual property rights; RIM’s ability to enhance current products and develop new products and services; RIM’s reliance on carrier partners, third-party manufacturers, third-party network developers and suppliers; and intense competition. These risk factors and others relating to RIM are discussed in greater detail in the “Risk Factors” section of RIM’s Annual Information Form, which is included in its Annual Report on Form 40-F and RIM’s MD&A (copies of which filings may be obtained at www.sedar.com or www.sec.gov). These factors should be considered carefully, and readers should not place undue reliance on RIM’s forward-looking statements. RIM has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The BlackBerry and RIM families of related marks, images and symbols are the exclusive properties and trademarks of Research In Motion Limited. RIM, Research In Motion and BlackBerry are registered with the U.S. Patent and Trademark Office and may be pending or registered in other countries. All other brands, product names, company names, trademarks and service marks are the properties of their respective owners.

Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)(unaudited)
Consolidated Statements of Operations
For the three months ended
September 1, 2007 June 2, 2007 September 2, 2006
Revenue $ 1,372,250 $ 1,081,911 $ 658,541
Cost of sales 667,833 521,841 288,456

Gross margin 704,417 560,070 370,085

Gross Margin % 51.3% 51.8% 56.2%

Expenses
Research and development 88,171 74,934 55,846
Selling, marketing and administration 197,943 177,483 116,283
Amortization 25,350 23,795 18,453

311,464 276,212 190,582

Income from operations 392,953 283,858 179,503

Investment income 18,984 16,447 12,606

Income before income taxes 411,937 300,305 192,109

Provision for income taxes
Current 137,643 130,166 30,631
Deferred (13,391) (53,081) 21,326

124,252 77,085 51,957

Net Income $ 287,685 $ 223,220 $ 140,152

Earnings per share

Basic $ 0.51 $ 0.40 $ 0.25

Diluted $ 0.50 $ 0.39 $ 0.25

Weighted average number of common shares outstanding (000’s)
Basic 558,991 557,853 555,162
Diluted 572,165 571,062 570,678

Total common shares outstanding (000′s) 559,820 558,066 551,424

Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)(unaudited)
Consolidated Balance Sheets
As at September 1, 2007 March 3, 2007
Assets
Current
Cash and cash equivalents $ 847,903 $ 677,144
Short-term investments 493,941 310,082
Trade receivables 852,568 572,637
Other receivables 108,332 40,174
Inventory 301,393 255,907
Other current assets 99,876 41,697
Deferred income tax asset 64,729 21,624

2,768,742 1,919,265

Investments 386,489 425,652
Capital assets 572,185 487,579
Intangible assets 144,565 138,182
Goodwill 112,438 109,932
Deferred income tax asset 4,960 8,339

$ 3,989,379 $ 3,088,949

Liabilities
Current
Accounts payable $ 181,860 $ 130,270
Accrued liabilities 411,360 287,629
Income taxes payable 212,923 99,958
Deferred revenue 36,009 28,447
Current portion of long-term debt 312 271

842,464 546,575

Long-term debt 6,891 6,342
Deferred income tax liability 42,299 52,532
Income taxes payable 28,608 -

920,262 605,449

Shareholders’ equity
Capital stock 2,126,098 2,099,696
Retained earnings 870,132 359,227
Paid-in capital 57,920 36,093
Accumulated other comprehensive income (loss) 14,967 (11,516)

3,069,117 2,483,500

$ 3,989,379 $ 3,088,949

Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)(unaudited)
Consolidated Statements of Cash Flows
For the three months ended September 1, 2007 For the six months ended September 1, 2007
Cash flows from operating activities
Net income $ 287,685 $ 510,905

Items not requiring an outlay of cash:
Amortization 41,277 78,993
Deferred income taxes (13,356) (62,151)
Income taxes payable 311 28,608
Share-based compensation 9,000 14,300
Other 223 1,019
Net changes in working capital items (98,042) (121,529)

Net cash provided by operating activities 227,098 450,145

Cash flows from financing activities
Issuance of share capital 19,446 23,183
Other paid-in capital 6,273 6,273
Excess tax benefits from share-based compensation 3,073 4,473
Repayment of long-term debt (74) (140)

Net cash used in financing activities 28,718 33,789

Cash flows from investing activities
Acquisition of investments (67,691) (182,498)
Proceeds on sale or maturity of investments 57,774 83,095
Acquisition of capital assets (78,995) (145,748)
Acquisition of intangible assets (13,718) (23,457)
Business acquisitions (3,200) (3,200)
Acquisition of short-term investments (335,728) (623,486)
Proceeds on sale and maturity of short-term investments 321,431 582,149

Net cash used in investing activities (120,127) (313,145)

Effect of foreign exchange loss on cash and cash equivalents (30) (30)

Net increase in cash and cash equivalents for the period 135,659 170,759
Cash and cash equivalents, beginning of period 712,244 677,144

Cash and cash equivalents, end of period $ 847,903 $ 847,903

As at
September 1, 2007 June 2, 2007
Cash and cash equivalents $ 847,903 $ 712,244
Short-term investments 493,941 456,372
Investments 386,489 394,138
$ 1,728,333 $ 1,562,754