TORONTO — Research In Motion Ltd.’s sales of the BlackBerry smartphone trounced estimates last quarter as it gained ground in emerging markets, signaling that the company may still have a future in the age of the iPhone.
RIM shares rose the most in almost a year after the company sold 7.4 million smartphones, about 500,000 more than analysts had projected. RIM also posted a narrower loss for the period than estimated and increased its cash holdings. That impressed some of RIM’s biggest critics, including shareholder Vic Alboini, who has previously demanded a shakeup in management and strategy.
“Those numbers are very, very positive,” Alboini, chairman of Toronto-based investment firm Jaguar Financial Corp., said in an interview. “RIM has taken a step up the ladder, and they can see where they’re going.”
The results show that RIM can gain customers in lower- income markets such as Asia and Africa, even as it struggles to compete in the U.S. with Apple’s iPhone and devices running Google’s Android software. The challenge now is a successful release of the BlackBerry 10 phone, the linchpin of the Waterloo, Ontario-based company’s comeback strategy. “If they can have another quarter of not burning cash and can get the device out in a few months, then investors are thinking, ‘Perhaps they have a chance to come back,’” said Neeraj Monga, an analyst at Veritas Investment Research in Toronto.
RIM’s free BlackBerry Messenger program, known as BBM, has emerged as a selling point in developing countries, where data plans often cost more. “It’s amazing when you go into those countries and you see how BBM is just kicking it,” Chief Executive Officer Thorsten Heins said, fresh from a tour through Asia, the Middle East and Africa. “I mean, it’s everywhere.”
RIM also did a better job conserving cash than some analysts predicted, curtailing operating expenses 7.9 percent. Cash and investments grew to $2.3 billion by the end of last quarter, up from $2.2 billion three months earlier. “The fact cash is not going to burn out in a quarter or two gives us an opportunity to see what BB10 is going to do,” Alboini said.
Revenue fell 31 percent to $2.87 billion in the period, which ended Sept. 1, topping a projection of $2.47 billion. While sales of the BlackBerry’s phone beat the 6.9 million predicted by analysts, they remain a fraction of Apple’s volume. The latest iPhone, released earlier this month, sold 5 million units in a single weekend.
RIM’s subscriber base climbed to 80 million at the end of last quarter, up from 78 million. Still, the new BlackBerry 10 lineup has been delayed at least a year, making it harder for the company to compete with the latest Apple and Android devices. RIM’s share of the global smartphone market dropped to 4.8 percent in the second calendar quarter, from 12 percent a year earlier, according to researcher IDC.