RIM Savors BlackBerry's Fruits

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Then I saw her face, now I'm a believer
Not a trace of doubt in my mind.
I'm in love, I'm a believer!

-- From "I'm A Believer" by Neil Diamond, as made famous by the Monkees

It's hard not to fall in love with Research In Motion (Nasdaq: RIMM  ) today. Last night's fourth-quarter report sent the stock on a 20% magic carpet ride, adding more than $5.6 billion to the handset maker's market value overnight. The best news: I think that the rally is sustainable, and based on solid business facts.

"Recession, schmecession," RIM said, reporting an 84% year-over-year revenue increase to $3.46 billion (in American dollars, thank you). That's even 23.5% greater than last quarter, so demand for the company's products is clearly very healthy.

That point was reinforced by 3.9 million net new subscribers during the quarter, and management's expectations to add about that many more in the current quarter. To put that in perspective, a well-respected consumer brand such as TiVo (Nasdaq: TIVO  ) has a grand total of 3.3 million subscribers, less than the crowd amassed by RIM in just three months.

Apple (Nasdaq: AAPL  ) has sold 17 million iPhones worldwide, and is regarded as the brand to beat in high-end phones. Also, that figure includes more than a few customers who upgraded from one iPhone to another, sexier version -- counting those sales twice. And hey, RIM gets some of that action too -- 7.9 million BlackBerry units shipped out this period, so a back-of-the-envelope calculation shows that about half of them were upgrades to replace an old digital leash from the same company. RIM has 25 million current subscribers under its belt, and it's not done growing by any means.

Operating expenses increased by just 3.2% over last quarter, showing some fiscal discipline. Earnings came in at $0.90 per share, 25% above last year's $0.72 per share. Mighty Apple will be hard-pressed to match these growth figures when it reports earnings in a couple of weeks. Traditional phone giants such as Nokia (NYSE: NOK  ) , Motorola (NYSE: MOT  ) , and Sony Ericsson might be fine investments for other reasons, but they're all eating RIM's dust.

I've been a BlackBerry skeptic, largely because the smartphone market is bristling with highly capable competition. But you just can't argue with growth like this. The BlackBerry fans are sticking around -- and telling their friends. In my Foolish opinion, this stock has barely begun its recovery from last year's heart-stopping drops.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (5) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 03, 2009, at 5:35 PM, SageOrFool wrote:

    RIM failed again. Verizon backs a loser. After RIM pulled out all the stops and threw away 3/4 of it's reserves in giving away Blackberries, advertising in Olympics, prime time TV ads, getting Verizon to believe in RIM's long term bedtime stories, drumming up support using Obama as a token, and countless petty maneuvers, and all RIM got was going from $41 to $59 a share? Come on RIM and Verizon, that petty little jump is pitifully inadequate in your struggle to survive in the face of so many world class competitors who are laughing at you, and they will make fruit jam out of your Blackberries in the coming quarters. Everybody worth their salt is enjoying your show. Regards.

  • Report this Comment On April 04, 2009, at 12:52 AM, Aeoran wrote:

    SageOrFool, your comments contain neither facts nor insights to back up your bitter convictions... perhaps you backed them up with some naked RIMM call option sales?

  • Report this Comment On April 04, 2009, at 12:59 AM, SageOrFool wrote:

    I am a former RIM employee.

  • Report this Comment On April 04, 2009, at 10:42 AM, SageOrFool wrote:

    In all fairness RIM and Verizon did a fantastic job in their effort to increase the number of Blackberries and Verizon subscribers. This is great in the pushing of smartphones to people. More smartphones will enter the market making them commodities very soon. Nokia is the undisputed consumer smartphone leader in the world, Samsung is becoming the boutique of smartphones. Apple is the ubiquitous smartphone the whole world craves. RIM is the business phone but unfortunately businesses are declining still and HTC is making heavy inroads in the business smartphones with unlocked handsets providing greater business values. There are dozens of international world class corporations entering the smartphone market, where would RIM fit in? That is the ultimate question.

  • Report this Comment On April 28, 2009, at 1:10 AM, sunnydog1 wrote:

    It is all relative smart money big money no money llll

    It might be only down 59 % from nov 07 highs but it is still up 300% from when I bought the barn on that one

    My dad used to say NO Slouch that one!


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