Profits overflow for BlackBerry maker

Revenue and profit both surged at Research in Motion in the third quarter, driven by strong sales of its first consumer-focused device, the BlackBerry Pearl.

Revenue for the three months to Dec. 2 was US$835.1 million, up 49 percent from the same quarter a year ago, RIM announced Thursday. Net income was $176 million, or $0.93 per share, up more than a third from last year and ahead of the forecast the company gave in September.

RIM added 875,000 BlackBerry subscribers during the quarter, bringing the total to about 7 million. Much of the increase came from North American carriers who began offering the Pearl after its launch in September.

The device is RIM’s first with a camera, audio player and video player, and is an attempt to expand beyond its traditional customer base of e-mail-addicted business users. RIM plans to add multimedia features to its enterprise devices in the future as well, said Jim Balsillie, RIM’s chairman and co-chief executive officer, in a conference call discussing the results.

The Canadian company shipped 1.8 million devices in the quarter, up from 1.4 million during the previous three months. The increase in Pearl shipments dragged down average selling prices slightly, to $345, a trend that’s likely to continue this quarter, said Dennis Kavelman, RIM’s chief financial officer.

Still, the company offered a strong forecast. It expects to add up to 975,000 subscribers this quarter, giving it close to 8 million by the end of its financial year. New customers are signing up for its service at the rate of more than 80,000 per week, it said.

The company faces mounting competition, however. Industry giants Nokia and Microsoft are both promoting their own wireless e-mail products. And Motorola recently bought Good Technology, which provides the mobile e-mail application on Motorola’s Q smart phone.

Research company IDC, in a report this year entitled “Attack of the BlackBerry Clones,” predicted that Microsoft’s Windows Mobile software will grow its share of the market to almost a third in three years’ time.

RIM has also yet to replicate its momentum in North America in other markets. Europe is challenging because of its multitude of countries, languages and mobile operators, Balsillie said. Twenty European carriers now offer the Pearl, Balsillie said.

Still, BlackBerry use by European business users has “turned a corner” after initial worries on the continent about security, he said.

The financial results announced Thursday were preliminary, since RIM is conducting a review of the way it granted stock options in the past. It doesn’t expect the review to have a significant impact on the results, it said.

This story, "Profits overflow for BlackBerry maker" was originally published by PCWorld.

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