Research In Motion Limited (RIM) (NASDAQ: RIMM)(TSX: RIM), a world leader in the mobile communications market, today reported third quarter results for the three months ended November 29, 2008 (all figures in U.S. dollars and U.S. GAAP, except where noted). The third quarter results reported today by RIM are in line with the preliminary third quarter results reported by RIM on December 2, 2008.
Revenue for the third quarter of fiscal 2009 was $2.78 billion, up 7.9% from $2.58 billion in the previous quarter and up 66.3% from $1.67 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 81% for devices, 13% for service, 2% for software and 4% for other revenue. During the quarter, RIM shipped approximately 6.7 million devices.
Approximately 2.6 million net new BlackBerry subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base increased from the prior quarter by approximately 14% to approximately 21 million.
“We are pleased to report record revenue results for the third quarter and we have entered the fourth quarter with strong momentum despite the challenging general economic conditions. In fact we have enjoyed our best ever start to the holiday buying season over the past few weeks,” said Jim Balsillie, Co-CEO at RIM. “RIM launched an unprecedented number of BlackBerry smartphones in the third quarter and these new products are being adopted at an even faster pace than we expected. Our industry leading product portfolio is positioned well to capitalize on the increasing market opportunity in the fourth quarter of fiscal 2009 and beyond.”
Net income for the quarter was $396.3 million, or $0.69 per share diluted, compared with net income of $495.5 million, or $0.86 per share diluted, in the prior quarter and net income of $370.5 million, or $0.65 per share diluted, in the same quarter last year. Adjusted net income for the quarter was $477.3 million, or $0.83 per share diluted. Adjusted earnings per share excludes a negative impact on RIM’s tax rate due to the significant depreciation of the Canadian dollar in Q3 and its effect on RIM’s U.S. dollar denominated assets and liabilities held by RIM’s Canadian operating companies that are subject to tax in Canadian dollars.(1)
Revenue for the fourth quarter of fiscal 2009 ending February 28, 2009 is expected to be in the range of $3.30-$3.50 billion. Net subscriber account additions in the fourth quarter are expected to be approximately 2.9 million. Earnings per share for the fourth quarter are expected to be in the range of $0.83-$0.91 per share diluted based on a gross margin of between 40-41%, a tax rate of 29-30% and operating expenses that are approximately 2% lower as a percentage of revenue than in the third quarter. Based on RIM’s current expectations for product mix and device average selling prices, RIM expects gross margins in fiscal 2010 to be similar to or slightly better than Q4.
The total of cash, cash equivalents, short-term and long-term investments was $2.49 billion as at November 29, 2008, compared to $2.24 billion at the end of the previous quarter, an increase of $249 million over the prior quarter. Uses of cash in the quarter included capital expenditures of approximately $196 million and intangible asset purchases of approximately $135 million.
A conference call and live webcast will be held beginning at 5 pm ET, December 18, 2008, which can be accessed by dialing 800-733-7571 (North America), 416-644-3418 (outside North America). The replay of the company’s Q3 conference call can be accessed after 7 pm ET, December 18, 2008 until midnight ET, January 8, 2009. It can be accessed by dialing 416-640-1917 and entering passcode 21252987#. The conference call will also appear on the RIM web site live at 5 pm ET and will be archived at http://www.rim.com/investors/events/index.shtml.
(1) Note: As set out in RIM’s press release dated December 2, 2008, there are proposed changes to the existing Canadian laws that will allow RIM to calculate its fiscal 2009 Canadian tax expense based on the U.S. dollar (the Company’s functional currency). While the Company elected for Canadian tax purposes to adopt these rules in Q3, the Company cannot recognize the related tax benefit of electing to adopt these rules for U.S. GAAP financial reporting purposes until they are formally enacted resulting in the higher tax provision for Q3. Once these new rules are enacted, the incremental tax expense in Q3 will be reversed, additional tax benefits from prior quarters of fiscal 2009 will be realized and future tax rate volatility will be reduced. The Company expects the proposed rules to be enacted sometime in calendar 2009. As a result the Company believes that the presentation of adjusted net income and adjusted earnings per share diluted enables the Company and the shareholders to better assess RIM’s operating results relative to its operating results in prior periods.