Research in Motion (RIMM) Q4 February 2010 Earnings Notes
Press Release
-Revenue $4.08B ($4.31B est.), +18% y/y, 10.5M units shipped (11M CS est.)
-EPS 1.27 (1.28 est.), gross margin 45.7%
-4.9M net adds, 41 million subscribers, ASP $311 ($320 CS est.)
-$5.11 net cash/share
Guidance
-Q1 revenue $4.25-4.45B (4.33B est.), EPS 1.31-1.38 (1.23 est.)
-Q1 11.2-11.8M units, ASP $305-310, gross margin 44.5%
-Q2 will have similar ASP as Q1
-2H-FY margins will be in low 40s with higher ASPs due to product mix/new launches
Conference Call
-units lower than they guided last quarter (10.6-11.2M) due to “one-time” carrier inventory adjustment
-inventory at 4 weeks, will be even lower in Q1
-10M activations in the quarter
-”If you saw the roadmap, you’d be blown away”
-launching new products hurts gross margins initially
Net-net
-Pros: good guidance for next quarter, ASPs guided higher in back half of year with new products
-Cons: revenue deceleration 41% last quarter to 18% y/y, ASPs weakening for now, inventory adjustment issues even in Q1
-At $71 after-hours, $5.11 net cash + $5 EPS power = 13.2Xs EPS
Key Questions
-Competitive landscape getting tougher with new Android phones from HTC/Sprint, HTC/Google, and Motorola. June launch of new iPhone with possible front-facing camera and higher resolution screen
-Can the RIMM OS compete as Google’s “free” Android OS gets better and iPhone App eco-system continues to ramp?
-Will carriers balk at monthly revenue share model at some point vs. “free” competition?