Research In Motion Limited (RIM) (TSX:RIM) today reported certain preliminary third quarter results for the period ended November 29, 2008.
Based on preliminary financial data, RIM expects revenue for the third quarter to be in the range of $2.75-$2.78 billion. Preliminary revenue is lower than the previously forecasted revenue range of $2.95-$3.10 billion but is approximately 65 per cent higher than revenue in the same quarter of last year.
Approximately one third of the difference between forecasted and preliminary revenue is expected to be a result of the depreciation of certain foreign currencies relative to the U.S. dollar in the quarter.
The remaining difference is primarily due to lower than estimated unit shipments of existing products, which RIM believes is a reflection of general economic weakness in the United States and shifts in product launch dates within the quarter. Subject to final review, gross margin in the quarter is expected to be between 45-46 per cent. The lower than expected gross margin is due primarily to product revenue mix and foreign exchange impacts within the quarter.
Diluted EPS for the third quarter is expected to be lower than the initial forecast of between $0.89-$0.97 per share diluted, primarily due to the lower-than-estimated revenue and the unfavorable impact of the strengthening U.S. dollar during the quarter. Subject to final review, RIM now anticipates diluted adjusted earnings per share to be in the range of $0.81-$0.83 which reflects the previously guided tax rate of approximately 29-30 per cent. Adjusted earnings per share excludes a negative impact on RIM’s tax rate due to the significant depreciation of the Canadian dollar relative to the U.S. dollar in the quarter.(1) RIM’s GAAP financial statements will reflect an income tax rate of approximately 40-42 per cent resulting in a diluted GAAP EPS for Q3 in the range of $0.67-$0.71. The adjusted earnings per share does not have any standardized meaning prescribed by GAAP and therefore is unlikely to be comparable to similar measures presented by other issuers. This non-GAAP financial measure should be considered in the context of RIM’s GAAP results.
RIM expects the number of net new BlackBerry subscriber accounts added in the quarter to be approximately 2.6 million, which is lower than the 2.9 million previously forecasted but reflects a 57 per cent increase over the same quarter of last year.
Despite the impact of later product launch dates and general economic weakness in the United States, customer response to the new BlackBerry products launched this quarter has been exceptional and RIM has experienced particularly strong momentum in recent weeks. Daily net subscriber account additions reached a record level on the day the BlackBerry Storm launched in the United States and RIM achieved a record number of weekly net subscriber account additions during the last week of the third quarter. The strong demand for new products has continued into Q4 and RIM is working closely with its partners to deliver sufficient product to take advantage of the growth opportunity in Q4 and beyond.
“Initial sales of new products have been very positive and we believe we have the strongest smartphone portfolio in the industry by far, however product launch timing, general economic conditions and foreign exchange volatility have tempered our results in the third quarter,” said Jim Balsillie, Co-CEO at RIM. “We believe RIM is well positioned to capitalize on the increasing smartphone market opportunity and we remain focused on driving growth in the fourth quarter of fiscal 2009 and beyond.”
RIM will report final third quarter results, provide guidance for the fourth quarter of fiscal 2009 and hold its quarterly earnings conference call on December 18, 2008 at 5:00 pm EST.