RIM says BlackBerry subscriptions soar, but still has profit warning

New products, including Storm, boost subscriptions forecast

Research In Motion Ltd. today raised its forecast for subscriber additions in the current quarter but warned that its profit will come in near the bottom of its previous expectations.

New product introductions contributed to record levels of net subscriber-account additions throughout December, as the BlackBerry maker also enjoyed a successful holiday sales surge, the company said.

The delayed and hotly anticipated BlackBerry Storm debuted to long lines and sellouts in late November. After the holidays, new subscriber additions have continued to exceed the company's expectations, though RIM expects the gains to become more normal next month.

RIM raised its earlier forecast of net subscriber-account additions for the fourth quarter, ending Feb. 28, by 20%. On Dec. 18, it had forecast 2.9 million net additions for the quarter. RIM also said it expects revenue for the quarter to be at or near the midpoint of the company's previous guidance. The December forecast called for fourth-quarter revenue between $3.3 billion and $3.5 billion.

However, RIM's quarterly earnings per share and gross margin are likely to be at the low end of the range predicted in December, the company said. That range was between 83 and 91 cents per share, with gross margin between 40% and 41%. RIM cited changes in product mix, lower inventory in sales channels, and a higher ratio of new subscriber sales to upgrades and replacements.

The subscriber-growth news came as a rare ray of light in a mobile industry that looks gloomy and uncertain heading into 2009. Overall handset sales plunged 10% in the fourth quarter, according to ABI Research. Nokia Corp., the largest mobile-phone maker, said today it would close a research and development facility and lay off about 320 people from it as a result of falling sales. Nokia sold 15% fewer phones in 2008's fourth quarter compared with a year earlier. But major mobile operators have reported subscriber gains and rising revenue from mobile data services.

In addition to making BlackBerry smartphones, RIM provides encrypted push e-mail services through its network operations centers. Last month, the company announced that it had sold its 50 millionth BlackBerry.

But not all has been rosy lately for the Waterloo, Ontario-based company. Last week, several RIM executives settled with the Ontario Securities Commission on charges they had engaged in improper backdating of employee stock options. As part of the deal, co-CEO Jim Balsillie agreed to step down from RIM's board for 12 months. The company is still working on a settlement with the U.S. Securities and Exchange Commission.

Copyright © 2009 IDG Communications, Inc.

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