April 3, 2008 / 3:22 PM / 10 years ago

RIM stock rises after banner results, strong outlook

TORONTO (Reuters) - Shares of BlackBerry maker Research In Motion RIMM.ORIM.TO were sharply higher on Thursday morning, rising on banner fourth-quarter results and a strong outlook posted by the company the night before, which dispelled a cloud of worries over the impact on RIM of the slowing U.S. economy.

“We’ve all heard the concerns — channel inventory stuffing, slowing macro environment, layoffs on Wall Street, increased competition, high valuation — but we think RIM’s impressive results and outlook dissolves the bear investment thesis,” Citi Investment Research analyst Jim Suva wrote in a note to clients.

“Simply put, we think RIM reported dynamite results and guidance that simply blows apart the bear case for the stock.”

RIM’s shares were up C$5.56, or 4.7 percent, to C$123.19 on the Toronto Stock Exchange. On the Nasdaq, they shot up $6.51, or 5.6 percent, to $122.30.

RIM’s results and outlook alike handily beat expectations as it said its push into the retail consumer market was gaining momentum and that promotions from carriers are helping boost the adoption of multimedia-rich models of the BlackBerry.

The company said it earned $412.5 million, or 72 cents a share, in the three months ended March 1. That was up from a profit of $187.4 million, or 33 cents a share, in the same period a year earlier.

About 38 percent of RIM’s subscribers are now classified as non-enterprise, which means they don’t work for large corporations or big government departments. Its total subscriber base is now more than 14 million.

“RIM saw strong carrier backing in the form of promotional activity, subsidies, and attractive data plans, and this clearly resonated with the consumer, which made up more than 50 percent of this quarter’s net subscriber additions of 2.18 million,” Suva wrote.

One of the main concerns overhanging the stock has been that as the U.S. economy slows, leading to layoffs on Wall Street, BlackBerry sales will slow as well.

Moreover, large companies may delay their decisions to upgrade their BlackBerry models to newer versions, which would also hurt RIM.

However, the earnings report on Wednesday suggested that none of this was affecting the Waterloo, Ontario-based company.

“RIM’s strong first-quarter guidance indicates continued growth momentum,” UBS analysts Maynard Um and Jeffrey Fan wrote in a note.

“Near to mid-term, we expect that the growth for BlackBerry will remain strong, driven by consumer adoption, hardware replacement and international expansion.”

They also said the company’s growing cash balance and a lower interest-rate environment could prompt it to buy back shares.

($1=$1.01 Canadian)

Reporting by Wojtek Dabrowski; Editing by Peter Galloway

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