Research In Motion's Pearl Drives Earnings Upside; Stock Up 5.7%

Research In Motion announced third quarter earnings excluding options costs of $0.95 per share, beating the analyst consensus of $0.92. Revenue rose 49% to $835 million, beating the consensus of $808 million. Guidance for Q4 was for EPS of $0.92-0.99 and revenue of $900 million, ahead of the current consensus of $0.95 and $848 million respectively. The stock rose 5.8% in late trading after the announcement. RIM added 875,000 new subscriber accounts during the quarter, driving its subscriber base to about 7 million. RIM attributed the strength in its results to the introduction in September of a multimedia phone with a music player and camera aimed at consumers, the BlackBerry Pearl, which was adopted by Cingular, Rogers, T-Mobile and over 20 European carriers. On its conference call, RIM said it was "targeting new product introductions late in Q4". But competition for mobile email devices is intensifying: Samsung recently introduced the BlackJack in November and Nokia the E61 in April. Motorola acquired mobile email software developer Good Technology in November, Nokia acquired Intellisync in February, and Hewlett-Packard announced Wednesday that it will acquire mobile device software vendor Bitfone Corp. Nokia, Motorola and Samsung report earnings next month.

• Sources: Full Conference Call Transcript, RIM Press Release, Blooomberg, WSJ.
• Related commentary: Palm Earnings Drop on Treo Delay, Onslaught of Competition, Can the BlackBerry Crack Japan?
• Potentially impacted stocks and ETFs: Research In Motion (RIMM) Competitors: Palm (PALM), Nokia (NOK), Motorola (MOT), Hewlett-Packard (HPQ). ETFs: Technology Select Sector SPDR (XLK), iShares Goldman Sachs Technology Index (IGM), PowerShares Dynamic Telecomm and Wireless Portfolio (PTE).

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