RIM: Majority Of BlackBerry Users Now Consumers, Small Businesses

By Joseph Palenchar -- TWICE, 6/19/2009

Waterloo, Ontario — The number of consumers and small-business employees using BlackBerry smartphones exceeded the number of corporate users for the first time in the fiscal first quarter ending in May, RIM co-CEO Jim Balsillie said.

In the quarter, 80 percent of the company’s net subscriber additions were from non-corporate users compared with a year-ago 60 percent, he said in releasing the company’s latest financial data. That boosted RIM’s non-corporate subscriber base to more than 50 percent in the first quarter.

Also during the quarter, RIM added about 3.8 million net new subscriber accounts, down sequentially from 3.9 million in the quarter ending February but up 65 percent from the year-ago. That performance was in line with expectations, Balsillie said. The gain expanded the worldwide BlackBerry user base to around 28.5 million.

About 7.8 million BlackBerry devices shipped during the fiscal first quarter, matching fourth-quarter shipments. For the fiscal second quarter, the company forecast handset shipments will rise to anywhere between 8.1 million to 8.7 million, up from the first-quarter pace, despite the usual summertime lull and carrier inventories expected to remain lean. The company attributed its forecast growth in part to planned summertime product launches and planned carrier promotions.

Continued sales gains have boosted RIM’s North American and worldwide smartphone market share, Balsillie said. He cited IDC statistics showing RIM’s smartphone share in the U.S. rose 6.4 percentage points in the fiscal fourth quarter and 8.5 percentage points in the first quarter to hit 55 percent, or more than twice that of the nearest competitor. Worldwide, the company’s smartphone share rose to 21 percent in the first quarter from a year-ago 16 percent, he said.

For the next 14 to 15 months, the company’s prospects are “spectacular,” he said, pointing to a “pretty spectacular roadmap,” growth in the smartphone segment despite lower industrywide handset sales, and carrier’s interest in RIM’s compression technology. That technology helps carriers manage bandwidth demand in the face of rising data usage, he explained.

Longer term, Balsillie said the prepaid market offers RIM “tremendous potential to grow.’’ He pointed out that the majority of cellular users outside North America are prepaid users and that in the U.S., prepaid carrier Metro PCS has begun to offer a BlackBerry.

In outlining its first-quarter results, RIM said revenues were up 52.7 percent from the year-ago quarter to $3.42 billion but down 1.1 percent from the fourth quarter. Net income was nonetheless up sequentially thanks to gross-margin gains to 43.6 percent from the previous quarter’s 40 percent. Gross margins were down, however, from the year-ago 50.7 percent.

Net income hit $643 million, up 24.1 percent sequentially and 33.3 percent from the year-ago quarter. Operating income of $690.1 million was down 5.9 percent sequentially but up 6.8 percent from the year-ago period.