Not any more

How quickly the tone on RIM changes

In Canada on September 17, 2010 at 14:38

Friday, September 17, 2010 11:13 AM

How quickly the tone on RIM changes

Tim Kiladze

For months investors have worried about Research In Motion’s RIM-T ability to keep pace with Apple’s dominant iPhone and to bump elbows with Google’s Android platform. After posting strong second quarter numbers Thursday, those fears are suddenly much less potent.

RIM’s quarterly sales were up 31 per cent over 2009 at $4.62-billion (U.S.) and earnings per share jumped 76 per cent to $1.46 over the same period last year. New shipments were a big factor, hitting the high end of estimates at 12.1 million units.

Investors took notice. On Friday morning RIM’s shares were up as much as 5 per cent, but have since given back some of the gains.

All the buzz is a sharp reversal from the recent negativity and should serve to remind investors that a rough period doesn’t mean a company is down and out. So many people were quick to assume the Torch wouldn’t give RIM a big enough boost before a quarterly sales figure even came out.

Now that some numbers are available, it’s clear that sales at AT&T stores in the U.S. tripled after the Torch launched. And CEO Jim Balsillie said RIM’s future plans will be laid out (at least in part) by the end of September, which just so happens to coincide with the BlackBerry Developer Conference. The company deserves some breathing room before investors make any drastic conclusions.

Of course, there is reason to be level headed. As TD Securities analyst Chris Umiastowski pointed out in a research note, “RIM still needs to convince investors that it can show a sustained recovery in [the] important US market.” That’s a valid concern, especially now that RIM has limited its subscriber disclosure and will announce new numbers only when new milestones are passed.

There is also reason to worry about market penetration. “We believe RIMM’s market share has likely peaked globally as well as in North America,” wrote Citigroup analyst Jim Suva. Although some people believe RIM has growth potential in Europe, Mr. Suva isn’t so confident. Softer sales in these regions could really hurt RIM in the future because North America and Europe make up more than 50 per cent of the global smart phone market.

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