RIM profit jumps, outlook underwhelms; stock drops

Wed Jun 25, 2008 6:50pm EDT
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By Wojtek Dabrowski

TORONTO (Reuters) - Research In Motion on Wednesday posted a profit outlook that fell short of analyst expectations, sending its shares 8 percent lower, even as the maker of the BlackBerry smartphone posted quarterly earnings that more than doubled.

Revenue surged to $2.24 billion in the three months ended May 31 -- up 107 percent from a year earlier -- and the company added 2.3 million subscribers, or about 100,000 more than it expected. About 60 percent of the new subscribers came from outside the company's base of business customers, a plus for RIM as it works to diversify.

But first-quarter earnings of $482.5 million, or 84 cents a share, fell just short of the average estimate of analysts, according to Reuters Knowledge.

More importantly, RIM offered an outlook for its second quarter that appeared to be a letdown for investors.

"The disappointment is on the guidance side and hence the reason for the selloff," said Research Capital analyst Nick Agostino.

"It appears as if they are forecasting earnings for the next quarter to be slightly lower than the consensus estimates," said Duncan Stewart, president of Duncan Stewart Asset Management in Toronto.

RIM's shares, which had risen roughly 20 percent since early April, dropped 7.9 percent in after-hours electronic trading to $131.10 from their regular-session close of $142.34 on Nasdaq.

The stock dropped even as RIM posted first-quarter earnings that rose sharply from a profit of $223.2 million, or 39 cents a share, a year earlier.   Continued...

<p>A shareholder uses his Blackberry while waiting for the Research In Motion annual meeting to begin in Waterloo, July 17, 2007. REUTERS/J.P. Moczulski</p>