Research in Motion (RIMM) Q2 August 2009 Earnings Notes
Previous Quarter
-Guiding Q2 to $3.45-3.7B revenue, 3.8-4.1M net adds, EPS 94c-1.03
-Q2 gross margin 43-44%
Press Release
-Revenue $3.53B (3.62B est.), +37% y/y. 8.3M units shipped (8.5M est.), Adjusted EPS 1.03 (1.00 est.), gross margin 44.1%
-3.8 million net adds, 32 million subscribers
-$4.35 net cash/share
Guidance
-Q3 revenue $3.6-3.85B (3.92B est.), EPS 1.00-1.08 (1.05 est.)
-Gross margin 43%, net adds 4.0-4.3M
Conference Call
-over 500 carriers, 170 countries
-net adds lower as higher % went for upgrades
-low levels of channel inventory
-80% of new customers from non-enterprise: consumer and small business
-$320 ASP for Q3 as high-end product will launch later in the quarter
-7.9M new activations
-4 weeks of channel inventory
-$345 ASP for Q2
-DSO 61 days vs. 59 days last quarter
-guiding Q3 9.2-9.9 million units
Q&A
-very strong unit demand and efficient component cost savings which they are passing through (IE lower ASPs)
-This is a “land grab”
-We are going much more mainstream (sounds like they are willing to give up margin to get more volume)
-”you really don’t know” what will happen (not sounding confident to say the least)
Net-net
-Net adds weaker than expected as units sold increasingly to upgraders
-Q3 guidance for ASPs and gross margin weak. ASP goes from $345 to $320 and gross margin goes from 44.1% to 43%
-At $73.48 after-hours it’s trading at 14Xs CY10 EPS of 4.92 ex-cash
-Tone sounds like the carriers are really hammering them in negotiations