Upbeat BlackBerry-maker reports sales bounce

Research in Motion, the Canadian manufacturer of the BlackBerry family of smartphones, brushed aside concerns about growing competition from Android-based handsets and Apple’s iPhone to report strong fiscal second-quarter results.

The company also raised its third-quarter BlackBerry sales target and revenue outlook forecast substantially, which helped lift its share price by more than 6 per cent in after-hours trading. The stock had fallen by 31 per cent this year.

RIM shipped 12.1m handsets in the latest quarter, above analysts’ expectations, despite facing challenges in some markets, including the Middle East where several governments have demanded access to encrypted BlackBerry messaging traffic and corporate e-mail.

RIM’s sales for the quarter increased by 31 per cent to $4.62bn, buoyed by particularly strong sales in Asia and other overseas markets and the launch of the BlackBerry Torch, the new flagship touchscreen slider smartphone. Analysts had been expecting revenues of about $4.5bn.

Net income climbed to $796.7m or $1.76 a share, from $475.6m, or 83 cents a share, a year earlier while the company added 4.5m net subscribers to end the quarter with more than 50m users.

Jim Balsillie, RIM’s co-chief executive, acknowledged that sales in some Middle East markets had suffered, temporarily, but had recovered. He also said that while sales in the company’s core US market were a little soft at the start of the quarter, they came back strongly after the BlackBerry Torch was launched in partnership with AT&T, the US network operator.

RIM, which dominates the US smartphone market, has faced growing competition from the iPhone and a slew of devices based on Google’s Android software, including those made by Motorola and Taiwan’s HTC.

RIM’s share of the smartphone market slipped to 18.2 per cent in the second quarter from 19 per cent a year earlier as Apple’s share rose to 14.2 per cent from 13 per cent, and Android surged to 17.2 per cent from 1.8 per cent, according to IDC, the market research firm.

However, RIM executives said the company’s grip on the crucial enterprise market in North America remained solid while international sales continued to grow strongly.

Underscoring its confidence in the run-up to the traditionally strong holiday season, RIM forecast that it would sell between 14m and 15m devices in the quarter and that revenues would rise to between $5.3bn and $5.55bn, compared to analysts’ expectation of $4.82bn.

Mike Abramsky of RBC Capital Markets said the strength of RIM’s guidance on subscriber additions in the third quarter suggested a rise in BlackBerry sales. “Healthy average selling prices and gross margins affirm that RIM is not seeing margin pressure,” he said.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.